The Anticorruption Imperative for Latin America

By Matthew Taylor*

Bar graph showing accountability in Latin America

Graphic courtesy of author. For a larger version, please click here.

Latin America’s reactions to the massive transnational scandals involving the Brazilian construction giant Odebrecht and its subsidiary Braskem are an important sign of progress in anticorruption efforts.  But across the region, courts’ reluctance to challenge elites remains a major obstacle to deeper accountability.  Brazilian, Swiss, and U.S. authorities’ announcement in December 2016 of a multibillion dollar global corruption settlement with the Brazilian firms – valued at $3.5 to 4.5 billion – was remarkable for being the largest in history.  It was also shocking for its revelations: Odebrecht admitted using a variety of elaborate subterfuges to launder bribe payments and corrupt proceeds, including by setting up a bribe department and buying an offshore bank.  Graft allowed executives to rewrite laws in their own favor, and guaranteed that the right officials were in the right place when public contracts were up for bidding.  The firms netted $3.60 for every $1 they spent on bribes in Brazil, and admitted to paying $788 million in bribes across twelve countries, including ten in Latin America.

The political salience of the charges is roughly similar in all ten Latin countries, muddying the reputations of presidents or former presidents in Argentina, Colombia, the Dominican Republic, Peru, Panama, Venezuela and, of course, Brazil.  Ministers and high-level officials have been implicated in the remaining countries: Ecuador, Guatemala, and Mexico.  Nearly one year after the settlement, it is time to ask how well law enforcement and judicial processes are resolving the allegations against these high-powered public and private sector elites.

  • In a paper forthcoming in Daedalus, I argue that accountability can be thought of as the outcome of a basic equation – A = (T + O + S) * (E – D) – combining transparency (T), defined in its most essential sense as public access to information about the government’s work; oversight (O), meaning that government functions are susceptible to surveillance that gives public or private agents the right to intensively evaluate the government’s performance; and sanction (S), effectively punishing wrongdoing and establishing societal norms to their rightful place. These are tempered by institutional effectiveness (E) – understood as the outcome of state capacity, relevant laws and procedures, and citizen engagement – and political dominance (D), which diminishes the incentives for active oversight or energetic sanction.  The graph above uses a combination of data points from the World Justice Project to measure each of the five variables.
  • The comparison yields mixed findings. On average, the nations implicated in the Odebrecht settlement do quite well on transparency, effectiveness, and political dominance – the outcome of a generation of democratic rule (with Venezuela being the obvious outlier).  But all ten countries perform comparatively poorly when it comes to oversight, and abysmally when the criterion is sanction.  This does not bode well for accountability, especially if we consider that among the Odebrecht Latin Ten, the highest-scoring country on the sanction criteria is Argentina, whose score is still below the middle-income country average.  In Brazil, where trial courts have led the way in imposing sanctions on business elites, political leaders are nonetheless protected against meaningful sanctions by an arcane system of privileged standing in the high courts.

Latin American judicial systems – long rigged to protect local economic and political elites – remain the principal obstacle to accountability.  The Odebrecht settlement signaled that a new day has arrived: new international norms and law enforcement across multiple jurisdictions are likely to continue to upset the cozy arrangements that have protected the region’s elites from corruption revelations for decades.  But true accountability will only come when local courts and prosecutors are empowered to effectively punish corrupt elites.  That implies changes in legal procedure, new laws, and most importantly, political will.  Perhaps the Odebrecht case will galvanize domestic public opinion and mobilize policymakers about the need to improve local justice systems.  The enormous costs of corruption revealed by the Odebrecht settlement suggest that change cannot come soon enough.

November 6, 2017

* Matthew Taylor is Associate Professor at the School of International Service at American University.  His forthcoming article in Daedalus is entitled “Getting to Accountability: A Framework for Planning and Implementing Anticorruption Strategies.”

The Panama Papers: Damning Evidence Against Latin American Elites?

By Emma Fawcett* and Fulton Armstrong

Panama Papers

Photo Credit: Pixabay / CC0 Public Domain

The “Panama Papers” have revealed the reputed secret accounts and tax-evasion strategies of a number of Latin American leaders, but preexisting widespread perceptions that political and economic elites are corrupt may reduce the immediate shock value of the revelations.  More than 11 million documents leaked from the Panama-based law firm Mossack Fonseca – given an initial review by the Süddeutsche Zeitung and International Consortium of Investigative Journalists (ICIJ) – provide evidence of 215,000 arrangements by which 14,153 powerful and wealthy clients from around the world hid their money from the prying eyes of the media, tax collectors, and public-accountability experts.  Early reports already indicate Latin Americans – small-time players compared to the Russians and some Europeans – are among those mentioned.

  • The Petrobras scandal that has paralyzed Brazil will find further fuel in these files. Investigators in Operation Car Wash apparently had no knowledge of many accounts held by Petrobras officials.  A secret company linked to House Speaker Eduardo Cunha, who’s leading the charge to impeach President Rousseff, reportedly figures prominently.
  • Argentine President Macri, his father, and brother reportedly had an offshore company for 10 years. They closed it in 2009, two years into Macri’s term as Buenos Aires mayor, but he did not report it.  The government says he was only “circumstantially” the CEO.
  • The president of the Chilean branch of Transparency International, Gonzalo Delaveau, resigned because he was linked to at least five offshore companies.
  • Mexican President Peña Nieto’s association with tycoon-contractor Juan Armando Hinojosa, who reportedly had a massive array of shelters worth US$100 million, is once again a liability. The President was dragged through the mud – and eventually exonerated of personal involvement – over a mansion that Hinojosa allegedly gave to his wife.  The Mexican government is investigating several dozen others named in the documents.
  • Many other cases are in the wings. Pedro Delgado (former governor of Ecuadorian Central Bank and cousin of President Correa); financial backers of Peruvian Presidential candidate Keiko Fujimori; and an array of former central bank and intelligence officials – Peruvians, Venezuelans, Panamanians, and others – are all being looked at.  In El Salvador, the Attorney General, already criticized for his investigative zeal, has raided Mossack Fonseca’s offices, suggesting more revelations to come.

Allegations of tax evasion, hidden income, and other forms of corruption are a mainstay of Latin American political lifeand the Panama revelations will only aggravate the oft-held opinion that rich, powerful people play by their own rules to maintain wealth and power.  Ramón Fonseca, one of the founders of the law firm, claims that the publicity is part of “an international campaign against privacy,” which he called “a sacred human right [and] there are people in the world who do not understand that.”  The backlash against someone like Argentine President Macri may not be too great, especially because his family ended the tax haven years ago.  But what makes the allegations potentially disruptive is the number of people implicated – across public and private sectors – in so many countries, in an investigation that has only just begun.  Further revelations are sure to come and, although themselves a sign of transparency, challenge people’s faith that leaders will come clean.  The revelations will fuel popular cynicism and discontent in the short term, but renewed demands for transparency may eventually help rekindle popular confidence in government.

April 11, 2016

*Emma Fawcett is a PhD candidate in International Relations at American University.   Her doctoral thesis focuses on the political economy of tourism and development in four Caribbean case studies: Haiti, Dominican Republic, Cuba, and the Mexican Caribbean.

The Summit of the Americas: Important Progress

By Aaron Bell and Eric Hershberg

VII Summit of the Americas Photo Credit: OEA-OAS / Flickr / Creative Commons

VII Summit of the Americas Photo Credit: OEA-OAS / Flickr / Creative Commons

The U.S.-Cuba rapprochement has returned the Summit of the Americas (SOA) to the way it was before George W. Bush turned it into a forum in which the U.S. was increasingly isolated – a community of vibrant but respectful debate reflecting the varied perspectives of the hemisphere.  The event in Panama this past weekend was dominated by Cuba’s attendance at its first SOA and Presidents Raúl Castro and Barack Obama’s cordial public encounter and hour-long meeting, the first of its kind between the two nations’ leaders in over half a century.  The next step in improving relations will be for Obama to formally announce Cuba’s removal from Washington’s list of “state sponsors of terrorism,” which the State Department reportedly recommended last week.  Regrettably, the leaders did not take advantage of the Summit as an occasion to announce a target date for the formal restoration of diplomatic relations and the appointment of Ambassadors.  But that, presumably, will come soon, and regardless, in the plenary session Obama set a new tone for U.S. policy when he acknowledged that “the days in which our agenda in this hemisphere so often presumed that the United States could meddle with impunity — those days are past.”  Obama clearly articulated a desire to move beyond not only the legacy of U.S. intervention in the region but also the stale ideological debates that, he observed pointedly, pre-dated his birth.

Statements and activities surrounding the SOA also reaffirmed the broad range of perspectives in the hemisphere,  including in attitudes toward the United States.  The “People’s Summit,” held parallel with the SOA, provided a forum for left-wing critiques aimed primarily at U.S. meddling in the region, in particular its foreign military bases and its recent allegation – which it subsequently backed away from – that Venezuela poses an “extraordinary threat to U.S. national security.”  The sanctions it imposed on senior officials drew critiques from around the region, including from Argentina, Colombia, and from Brazil’s Dilma Rousseff, who summarized regional sentiment in characterizing them as “counterproductive and inefficient.”  The criticism was overshadowed, however, by widespread applause for changes in U.S.-Cuba relations.  Obama also won points from observers for meeting with Venezuelan President Nicolás Maduro, who used the Summit to denounce the 1989 U.S. invasion of Panama and present to Obama a list of 11,000 signatures opposing Washington’s sanctions.  Maduro praised the meeting as the “Summit of Truth” and even “cordial,” noting that it opened the door to further discussions on the bilateral relationship.  Obama also seemed to subscribe to a different role for civil society representatives – as opponents of sitting governments – at the summit, choosing to meet privately, for example, with Cuban dissidents opposed to the Raúl Castro and his government.

Obama’s steps to remove the festering U.S.-Cuba issue from the hemispheric agenda have been game-changing, even if some presidents criticized Washington’s continued enforcement of the economic embargo and the Administration’s bewildering inability to move faster to remove Cuba from its highly politicized terrorist list.  This summit may signal a return to the values and respectful debate that Obama, and before him Bill Clinton, espoused at past Summits, and may pave the way for cooperation over contemporary issues rather than Cold War-era ideological hang-ups.  In the final days before the Summit, senior White House advisors had intervened to ease tensions over the State Department’s national security rhetoric vis-à-vis Venezuela, emphasizing with regret that assertions regarding Venezuela’s posing a security threat were an unfortunate procedural necessity rather than a genuine assessment of the situation.  This recognition that “words matter” turned on their head the words used earlier in the week by Assistant Secretary of State Roberta Jacobson in lamenting that Latin American governments were not using language similar to Washington’s to characterize the deteriorating political situation in Venezuela.  While the correctives from the White House and the focus on the transformation of U.S.-Cuba relations were both conducive to a successful SOA, these developments did overshadow both the official theme of this year’s summit – Prosperity with Equity – and related discussions on energy, the environment, and education.  These crucial issues, all ripe for regional cooperation, are the core of what should become the focus of U.S.-Latin American relations for the remainder of this administration and beyond.

April 13, 2015

Panama: A Central American Singapore?

By Tom Long*

Singapore (left) and Panama City (right) / William Cho and Jim Nix / Flickr / Creative Commons

Singapore (left) and Panama City (right) / William Cho and Jim Nix / Flickr / Creative Commons

As a transportation hub, logistics center, and regional financial player, Panama has long been painted by investment bankers and Panamanian politicians as a potential “Singapore of Latin America,” but that vision still seems a way off.  In some respects, Panama’s story has been quite impressive.  For a decade, it has boasted GDP growth far beyond the regional average, even surpassing 10 percent in some recent years.  Unlike many of its neighbors, its dollar-based economy relies on services, not exports of commodities or low-value-added light manufacturing.  Since the 1989-1990 U.S. invasion to unseat General Manuel Noriega, the total size of the Panamanian economy has quadrupled in constant dollars.  It is also different from Singapore in important ways.  Singapore’s approach to planning and public housing might be helpful in Panama City, which has suffered traffic, environmental degradation, and inadequate housing for the poor as a consequence of poorly planned growth.

In other important ways, however, the Panama-Singapore comparison is less apt.

  • Singapore is a city, with nearly two million more people than Panama has spread across 100 times the landmass. Urban-rural divides are wide in Panama, with poor delivery of health and education services outside the cities, exacerbating inequality.  A Singapore-style strategy in Panama would leave the countryside behind – and indigenous and Afro-Caribbean populations would benefit much less.
  • Differences between the two countries in governance – for better and worse – are profound. The Panamanian people are much freer under the country’s democracy than they would be under a single-party-dominated system like Singapore’s.  In other ways, though, Panama’s governance leaves much to be desired.  Corruption is a massive problem, and watchdog groups highlight weakness in the rule of law, judicial independence, and press freedom.  Projects to expand the Panama Canal and build a capital city subway are over budget and behind schedule, and have suffered from strikes, contract disputes, and questionable bidding practices.  While it may seem easy to blame the corruption on former President Martinelli, who faces criminal charges, the problem has much deeper roots.
  • The two countries have very different policies toward education. Singapore invested, and continues to invest, heavily in world-class universities.  Panama lacks these, weakening its ability to compete globally in industries where innovation is key.  While Panama’s primary education has improved, its research and development lags.
  • A final difference is where the countries find themselves in their political and economic evolution. Singapore became independent 50 years ago, but it has been only a quarter century since Panama ended its kleptocratic, military rule.  It has been just 15 since the United States officially turned control of the canal over to Panamanian authorities.  The roots of its problems cannot be easily or quickly extirpated.

Panama’s boosters often use the comparison to highlight the areas in which Panama excels – economic growth, unique geography, and infrastructure crucial to global shipping and air transit.  The comparison might be more helpful in highlighting areas where Panama needs to improve.  These include dedicating resources to higher education and R&D, addressing inequality, rooting out corruption, and enhancing political and bureaucratic accountability.  Singaporean scholar Alan Chong argues that Singapore’s attempt to present itself as a model, global city is in part a foreign policy strategy of “virtual enlargement.”  The city-state’s wealth, reputation, and active role in international organizations allow it to “punch above its weight” in Southeast Asia and beyond.  Some chapters of Panama’s recent economic story might be the envy of neighbors with their own canal dreams, but the country will need to focus on governance and accountability if even its logistics-hub strategy is in fact going to deliver shared welfare at home and enhanced influence abroad – let alone become a Latin American equivalent of an Asian Tiger.

March 2, 2015

* Dr. Long is a visiting professor in International Relations at the Centro de Investigación y Docencia Económicas in Mexico City.  He is the author of Latin America Confronts the United States: Asymmetry and Influence, which is forthcoming with Cambridge University Press.

Will Washington’s Attention to Latin America Last?

By Fulton Armstrong

Photo Credit: Prensa Presidencial Venezuela

Vice President Biden meets with Venezuelan President Maduro / Photo Credit: Prensa Presidencial Venezuela

U.S. President Obama, Vice President Biden, and Secretary of State Kerry gave Latin America increased priority in 2014, including at least two efforts to open channels to countries previously off their calling lists.  Issues combining domestic politics and foreign policy– such as immigration, Cuba, and drug policy – saw noteworthy breakthroughs.

  • President Obama’s highest profile action was his announcement in December that the United States and Cuba would normalize relations. He said he would travel to Panama in April for the Summit of the Americas – the venue of his pledge to seek a “new beginning” with Cuba in 2009 and his isolation over the Cuba issue in 2012.  Last May, his trip to Mexico and Costa Rica, where he met with Central American presidents, signaled a shift on counternarcotics strategy – downplaying militarized efforts – in response to the region’s concerns about surging violence.  His November announcement of executive measures on immigration, offering temporary legal status to millions of undocumented migrants, also steeped him in Latin America policy.
  • Vice President Biden greatly expanded his Latin America portfolio, at times as stand-in for Obama but also putting a deep imprint on policy. On an extended trip in June, he met with heads of state during the World Cup and attended a summit in Central America.  In November he participated in a followup meeting with the Honduran, Salvadoran, and Guatemalan Presidents hosted by the Inter-American Development Bank, where he announced U.S. measures to prevent another crisis involving migrant children as was seen last summer.  He met with and telephoned Latin American Presidents more than a dozen times over the year and, on the margins of Brazilian President Rousseff’s reinauguration last week, even met with Venezuelan President Maduro, with whom he agreed that it was time to restore ties.
  • Secretary Kerry traveled to the region several times – to Mexico, Panama, Peru, and Colombia – and met with Latin American Presidents and foreign ministers in Washington. Some critics judged his broad policy speeches as unexciting, but he clearly has confidence in his Latin America team, and sources say his support for the President’s initiative on Cuba was strong.

We Latin America watchers in Washington tend to complain that our region doesn’t get enough attention, but it’s clear that the Administration’s level of engagement in 2014 was deeper and more sustained than in years past.  Senior advisors at the National Security Council, Vice President’s office, and State Department – Ricardo Zúñiga, Juan González, and Assistant Secretary Roberta Jacobson, respectively – got their bosses’ to act despite the many competing demands in other regions occupying the front pages of U.S. newspapers.  Several ongoing processes promise continued senior-level attention in at least the first half of the new year.  The normalization process with Cuba could entail a visit there by Secretary Kerry, and preparations for the Summit of the Americas in Panama in April afford opportunities to give momentum to U.S. engagement – in addition to rebuilding U.S. credibility in the Summit process lost at the Summit in Cartagena in 2012.  Continued political crisis in Venezuela, nose-diving oil prices, progress in the Colombian peace talks, and the ever-evolving drug threat suggest 2015 will also be a challenging year.  For now at least, Washington’s senior team is engaged.

January 7, 2015

Who Will Attend the OAS Presidential Summit in Panama?

By Fulton Armstrong and Eric Hershberg

OAE-OAS & tgraham / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

OAE-OAS & tgraham / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

The Summit of the Americas isn’t until next April, but interest in how Panama as host handles near-unanimous pressure from Latin America to invite Cuban President Raúl Castro, and how the United States and Cuba will respond, is growing fast.  Speaking to reporters at the United Nations last week, U.S. Assistant Secretary of State Roberta Jacobson answered several questions on the U.S. position.  Key excerpts follow:

  • Asked “if the United States is still opposed to Cuba attending.”  On the Summit of the Americas, I think we’ve been pretty clear in our position on the summit, which is that obviously Panama is the host country for the summit, and as the host country they will make the decisions on invitations to that summit.  …  And the fact of the matter is we have said from the start that we look forward to a summit that can include a democratic Cuba at the table.  We also have said that the summit process, ever since Quebec in 2001, has made a commitment to democracy, and we think that’s an important part of the summit process.  But the decision about invitations is not ours to make, and obviously there’s been no invitations formally issued to the United States and other countries. And so there is no acceptance or rejection yet called for or made. …
  • Asked “is there a chance that the U.S. might refuse going.”  Again, I think you won’t be surprised to hear me say that we’re really not going to answer hypotheticals in the future yet.  Obviously, the Summit of the Americas is in April and that’s not a situation that we can answer, although I think we have made clear that we believe the summit process is committed to democratic governance and we think that the governments that are sitting at that table ought to be committed to the summit principles, which include democratic governance. And therefore that’s our position at this point.  Obviously, we have a position on Cuba which does not at this point see them as upholding those principles.

Panama’s likely invitation to Cuba – reflecting the consensus of 32 hemispheric nations at the last Summit – will draw protests from official quarters in Washington.  But it’s far from certain that the Obama Administration would risk blame for torpedoing the 20-year Summit process.  Obama survived a handshake with Raúl Castro at Nelson Mandela’s funeral last December, and being in the same room with him again as a President in the second half of his second term will have little political consequence.  A workshop in Mexico City in June, in which CLALS researchers participated, and another in Ottawa in September, sponsored by the Center and the University of Ottawa, explored likely outcomes.  Mexican international relations specialists speculated that a reasonable outcome was for the United States to show up like a polite guest, and thus avoid having the anachronism of U.S. antagonism toward Cuba overshadow its broader relations with Latin America.  Canadian experts were deeply concerned that Cuba’s inclusion might undermine the centrality to the OAS of the Inter-American Democratic Charter, but they agreed that failure to convene a Summit would constitute a serious blow to the OAS and to the regular summits that provide Canada a seat at the inter-governmental table.

The reality is that Cuba does not conform to the Democratic Charter or to the broader OAS criteria of democratic rule, but equally real is that Latin America sees Cuba as a full member of the hemisphere and has lost all patience with those in Washington who would deny that.  Either Washington — and Ottawa — set aside their objections to Cuba’s inclusion or they bid farewell to such fora and their constructive impact on regional relationships that ought to matter to them.  Moreover, if they acquiesce to Cuban participation but then try to commandeer the agenda and make the Summit a seminar on democracy and human rights, it will only reinforce the widespread sense in the region that Washington cannot move beyond its obsession with the trivial matter of Cuba and get on with a serious conversation among equal partners.  They would thus sacrifice an opportunity to discuss issues on which significant, substantive advances are possible through dialogue among leaders of countries throughout the hemisphere.  The value of the Summit rests with the capacity of all involved to act like grownups.  President Obama did so at Mandela’s funeral, and it will be telling whether he can do it again in Panama this coming April.

October 2, 2014

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

By Eric Hershberg
Embed from Getty Images
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.

Cuban Infrastructure and Brazilian State Capitalism: The Port of Mariel

By Eric Hershberg

Panamax Container Ship / Wikimedia Commons

Panamax Container Ship / Wikimedia Commons

The Port of Mariel – long associated with a boatlift in 1980 that brought more than a hundred thousand Cubans onto U.S. shores – could either help launch Cuba into a new regional role as a shipping/trading hub or be yet another white elephant project.  This irony was noted in a recent New York Times piece, which portrayed the venture in an optimistic light.  According to some observers, the massive port upgrading that is underway there at the moment, with Brazilian funds and a leading Singaporean port operator slated to operate the venture, is a ticket for Cuba to thrive in the 21st century as a vital logistics hub, funneling goods to Europe, the Greater Caribbean and, eventually, the United States.  All of this is on the agenda because of the Panama Canal expansion that will allow for post-Panamax ships to transit the canal.  These ships will have the capacity to carry over twice the amount of cargo than the current vessels that transit the canal, thus re-routing trade that now travels from the west coast of the U.S. by land to the east coast, and at the same time expanding traffic from Asia on to Western Europe.

The $957 million Mariel project entails a Brazilian investment of $682 million with the rest of the financing coming from Cuba.  The ambitious project goes well beyond the port itself, as the Cuban government has taken the exceptional step of authorizing a surrounding free trade zone – essentially an export processing zone along the lines of those that have housed maquilas throughout much of the Greater Caribbean as well as in regions such as Guangdong, in China, which became an export powerhouse.  The notion is that industries that locate within the special economic zone around Mariel will enjoy 50-year, renewable contracts and numerous beneficial tax treatments, including tax-free processing of imported inputs into products that will in turn be shipped out through the state-of-the-art port.

For some analysts of Cuba’s economic development prospects, this is a historic opportunity, one that will become even more relevant once the U.S. embargo finally goes away.  By this account, a combination of geographic location and a highly skilled workforce places Cuba in an ideal situation to take advantage of these massive investments.  If the Mariel initiative were to work as envisioned, the result would be a massive increase in industrial employment in Cuba which, under this scenario, could become a high value-added manufacturing hub and a distribution point for goods transiting from Asia to the greater Atlantic.  The opportunity may be all the more exciting given the failure of the U.S. federal government to invest in port upgrading of a sort that a well-functioning capitalist state would undertake.  At the moment, The Economist reports only Baltimore and Norfolk have the capacity to accommodate post-Panamax ships, leaving the field open for newcomers such as the Bahamas (already equipped) and Havana (about to be so).  Other analysts observe, however, that the project faces severe constraints, ranging from the institutional bottlenecks in Cuba to the reality of competition from other deep water ports (which do not suffer from the sclerotic institutional environment that plagues so much in Cuba), as well as competition from other countries with highly skilled workforces (Costa Rica, the Bahamas, and much of the English-speaking Caribbean).

Nevertheless, critics in Cuba and abroad question whether the massive Brazilian investment in the project – essential to its success – is driven not only by economic opportunities but also by the domestic political calculations of President Dilma Roussef. Loans provided to the Brazilian engineering conglomerate Odebrecht to build the port are from the Brazilian development bank, BNDES, and guaranteed by the Brazilian state, so unlike EU companies that eschewed investment in Mariel, Odebrecht incurs minimal risk.  Mariel represents both a geostrategic and a domestic political calculation by the Dilma government. Brazil is happy to take advantage of the U.S. absence in Cuba to build the port and its relationship with Cuba.  At home, it allows the government to reward the construction firms – such as Odebrecht – that are consistently the largest campaign donors in Brazilian politics.  It also helps to slake the passions of factions of the left that seek closer ties to Cuba, and have been disappointed by the Dilma and Lula administrations’ relative political moderation at home.  The fortunes of Mariel may in the end reveal as much about Brazil as about Cuba.

Finding New Approaches to Media-Government Tensions in Latin America

By John Dinges

Press Conference in Lima, Peru Photo credit: World Economic Forum / Foter.com / CC BY-NC-SA

Press Conference in Lima, Peru Photo credit: World Economic Forum / Foter.com / CC BY-NC-SA

Establishment news media and government are on a collision course in a number of Latin American countries.  At the heart of the conflict is government rejection of the classic role of an ideologically diverse press as a check on government power and as a forum of citizen deliberation.  The media, in response, charge that government actions constitute violations of international free press guarantees.  But that defense has been ineffective and has not resonated at the popular level.  All of the governments involved are democratically elected, and most espouse left-of-center programs of progressive reform aimed to benefit the poorest sectors and address other forms of inequality.

The most severe conflicts are in Venezuela and Ecuador, where aggressive government use of laws and lawsuits has dramatically diminished the influence of independent television and newspaper organizations.  The once strident news media, not unfairly characterized as the de-facto opposition, have been cowed, and are cowering.  At the same time, governments are embarking on the redistribution of the broadcast spectrum to favor community and state-owned (“public”) channels.  The Morales government in Bolivia has achieved the upper hand over the media as it builds its own media network.  The Kirchner government of Argentina is fighting a legal battle –with mixed success – to cripple the media empire of Grupo Clarín, the owner of the largest newspaper in Latin America and the largest cable network.  The conservative governments of Honduras and Panama are also on the freedom of expression watch list, indicating that the phenomenon is not purely a matter of ideology.

The polarization and growing government dominance represents a serious problem for democracy in these countries.  For all the harsh rhetoric on both sides, however, the overall threat to freedom of expression (measured in censorship, direct control of media and imprisonment of journalists) is far less than was the case during the rightist military governments of previous decades.  Still, it would be a mistake to limit our promotion of healthy democracy to the defense of the traditional “legacy” media institutions in these countries.  Government leaders, especially Presidents Correa of Ecuador and Kirchner of Argentina, have used (some would say misused) democratic arguments in criticizing the traditional media.  They charge that the concentration of media in the hands of the private sector (with ownership participation of banks in the case of Ecuador) is itself a violation of democracy, and that they are trying to “democratize” the media by delivering increased access to citizens in the form of public and community media.  Not surprisingly, these new media creations are beholden to the government and lack political independence.  But they are not going away.  In an effort to defuse the tension, institutions such as the Carter Center and others have developed an alternative conflict resolution approach that is quietly garnering support.  The idea is to promote an honest dialogue between governments and wide sectors of the media.  It would create a process to explore the substance of government positions as well as investigate alleged abuses. To this end, the Carter Center organized meetings earlier this year in Ecuador and Bolivia, and a conference was held at Columbia University’s School of Journalism this month bringing together leaders of government, media institutions and international organizations to debate media regulation and press standards as a platform to reconstitute consensus about media in democratic societies.

Chávez’s Passing: In the Hemisphere’s Words

"Chavez" | by Donmatas1 | Flickr | Creative Commons

Chavez | by Donmatas1 | Flickr | Creative Commons

Below are excerpts from statements made by leaders of the Western Hemisphere upon learning of the passing of Venezuelan President Hugo Chávez.  The tone of the U.S. President and Canadian Prime Minister’s remarks is different from the Latin Americans’.

Barack Obama (U.S.A.)
“As Venezuela begins a new chapter in its history, the United States remains committed to policies that promote democratic principles, the rule of law, and respect for human rights.”

Stephen Harper (Canada)
” I would like to offer my condolences to the people of Venezuela on the passing of President Chávez.

“Canada looks forward to working with his successor and other leaders in the region to build a hemisphere that is more prosperous, secure and democratic.

“At this key juncture, I hope the people of Venezuela can now build for themselves a better, brighter future based on the principles of freedom, democracy, the rule of law and respect for human rights.”

Enrique Peña (México)
“Lamento el fallecimiento del Presidente Hugo Chávez. Mis más sentidas condolencias a su familia y al pueblo venezolano”.

Ollanta Humala (Perú)
“Adiós Comandante y amigo Hugo Chávez. Mis sentidas condolencias a su familia y a todo el pueblo venezolano”.

Ricardo Martinelli (Panamá)
“Deseamos expresarle nuestro pésame al Pueblo Venezolano y a la Familia Chávez por el sensible fallecimiento del Presidente Hugo Chávez”.

Evo Morales (Bolivia)
“Duele, pero también queremos decir a los pueblos, fuerza y unidad ahora más que nunca. Estamos destrozados”.

Juan Manuel Santos (Colombia)
“Lamento profundamente la muerte del presidente de Venezuela Hugo Chávez Frías. Nuestras sinceras condolencias”

Dilma Rousseff (Brasil)
“Estamos de luto por la pérdida de un gran amigo. Va a dejar un hueco en ‘la historia y en las luchas’ de América Latina”.

Sebastián Piñera (Chile)
“Fue un hombre profundamente comprometido con la integración de América Latina. …  Sin duda teníamos diferencias, pero siempre supe apreciar la fuerza, el compromiso y la voluntad con la cual el Presidente Chávez luchaba por sus ideas”.