What Will Trump Do About NAFTA?

By Malcolm Fairbrother*

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U.S. President-elect Donald Trump and the flag of the North American Free Trade Agreement (NAFTA). / Flickr and Wikimedia / Creative Commons / Modified

Despite his campaign rhetoric repeatedly attacking the North American Free Trade Agreement, U.S. President-elect Donald Trump probably won’t touch it, except in superficial ways.  He has called NAFTA the “worst trade deal ever,” and promised to pull the U.S. out unless Mexico and Canada agree to renegotiate it.  Last week, he suggested renegotiation of NAFTA will include provisions for Mexico to repay the U.S. government for the wall he wants to build along the border.

Dismantling or even significantly rewriting the accord is unlikely for a couple reasons:

  • First, the billionaires, chief executives, and friends he is choosing for his cabinet are hardly people inclined to dismantle an agreement whose contents largely reflect what American business wanted from the U.S.-Mexico relationship when NAFTA was being negotiated in the early 1990s. Corporate preferences weighed heavily against any big deviation from the status quo after the last political transition in Washington, in 2008.  Barack Obama too said that “NAFTA was a mistake,” though his criticisms were a little different.  He railed against lobbyists’ disproportionate influence over trade policy, and promised big changes to international trade agreements, including better protections for workers and the environment.  Even so, he didn’t touch NAFTA, and the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) he negotiated included – like NAFTA – shady provisions for investor-state dispute settlement.
  • It would be near-impossible, or least massively expensive, to get what Trump seems to want most: a big drop in imports from Mexico. In his eyes this would make NAFTA a better deal for America, though of course serious economists disagree.  Realistically, reopening the agreement would be very messy, and if he tried to throw up massive new trade barriers business leaders would strongly object.  NAFTA could include some additional measures to make it easier for goods and/or people to get around among the NAFTA countries, but that’s not what Trump has promised.

His economic nationalism makes the Republican Party establishment squirm, but it’s clear it also helped Trump win several Midwestern states, tipping the electoral college in his favor.  Insofar as agreements like NAFTA entrench rules friendly to business, and generate market efficiencies and economies whose benefits accumulate in the hands of the few, voter hostility is no mystery.  But economics is only part of the reason.  The bigger issue is what the backlash against globalization – embodied also by Brexit and the rise of neo-nationalist parties in Europe – means more broadly.  The average Democratic voter has a lower income than the average Republican voter, but Democrats are more supportive of trade agreements because they are more internationalist, more open to other cultures, younger, more educated, and more urban.  Throughout his presidency, Trump will therefore be squeezed between his working class rhetoric – appealing to the distrustful – and his business class milieu.  He is an extreme case of the politicians’ mercantilist thinking on trade, wherein exports are good and imports are bad, and “trade deals” like NAFTA are somehow like deals in the business world, where it’s possible to out-negotiate someone.  The reality is that this thinking – which flies in the face of basic economics – doesn’t point to any clear course of action.  This is why Trump won’t actually do much about NAFTA.

January 10, 2017

* Malcolm Fairbrother is social science researcher and teacher/mentor in the School of Geographical Sciences at the University of Bristol (UK).  This article is adapted from a recent blog post for the American Sociological Association.

Haiti: Hurricane Matthew’s Devastating Impact

By Emma Fawcett*

Group of Haitians unpacking supplies

A citizen of Beaumont, Haiti unloads hurricane relief supplies from USAID on October 13, 2016. / U.S. Air Force / Photo by Tech. Sgt. Russ Scalf / Flickr / Creative Commons

Hurricane Matthew, which made landfall on Haiti’s southwestern claw on October 4, devastated citizens’ lives, homes, and businesses – and set back much more across the country.  Some 546 are reported dead, and 128 are still listed as missing.  According to World Bank estimates, the Category 4 hurricane caused nearly $2 billion in damages, including $600 million in the agricultural sector.  The hard-hit southern peninsula provides about one-third of Port-au-Prince’s food supply, and the losses of crops and fishing equipment have long-term implications for food security.  Ninety percent of the homes in the South and Grand’Anse regions were damaged or destroyed, and according to the Environment Ministry, the storm sped up deforestation and has destroyed more recently planted trees.  The relief efforts have been poorly coordinated by Haiti’s interim government, resulting in press reports of looted aid convoys and sporadic protests.

The storm has also set back almost every key initiative underway in Haiti.

  • Just two months after the United Nations finally acknowledged its role in bringing cholera to the country in 2010 (for which it subsequently proposed an aid package that includes restitution to victims), flooding and contaminated water have led to a dramatic increase in the number of cholera cases. An estimated 3,400 new cases have been reported in just the last four weeks.  With help from the World Health Organization, the Haitian Ministry of Health will begin administering 1 million doses of the oral cholera vaccine, but addressing cholera also necessitates serious improvements in access to safe water and sanitation.
  • Haiti’s elections, scheduled for October 9 and already a year overdue, were rescheduled once more due to the hurricane. They are now set for November 20, but foreign observers and candidates alike indicate that major obstacles remain.  More than 770 schools, which are typically used as polling stations, were destroyed by the storm, and roads throughout the south remain impassable.

Once again, it falls to the international community to lend Haiti a hand, but donors have been sluggish.  During a visit in mid-October, UN Secretary General Ban Ki-moon said that he was “disappointed by the response of the international community.”  Less than a third of the UN’s $120 million appeal for immediate hurricane relief has been raised – and the UN was already struggling to raise funds for its separate cholera fund.  Donor fatigue in the United States, where the government contributed several billion in tax dollars and more than half of citizens made private donations following the 2010 earthquake, has been deepened by widespread perceptions that money was wasted.  Poor coordination, wasteful spending by aid agencies, and political stagnation have meant that Haiti has little to show for the $9 billion in earthquake relief.  (The Red Cross, for example, spent $500 million on various projects, but, despite its stated focus on housing, famously built just six permanent homes.)  Canada’s anticipated assumption of leadership of MINUSTAH, the UN peacekeeping mission, from Brazil by the end of the year may help energize aid efforts.  Canada has a large Haitian diaspora population and Prime Minister Trudeau has signaled interest in taking a larger role in Haiti’s recovery, but Canada’s contributions to hurricane relief are still dwarfed by those of the United States.  Once again, Haiti lurches from one crisis to another – and it will continue to until aid and development efforts are better coordinated and the country achieves some measure of political stability.

October 31, 2016

Emma Fawcett recently completed a Ph.D. in International Relations at American University.  Her doctoral thesis focused on the political economy of tourism and development in four Caribbean countries: Haiti, Dominican Republic, Cuba, and the Mexican Caribbean.

What does “Canada is back” mean in the Americas?

By Stephen Baranyi*

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Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau during the “Tres Amigos Summit” in Ottawa, June 2016. / Presidencia de la República Mexicana / Flickr / Creative Commons

Canadian Prime Minster Justin Trudeau and his cabinet ministers’ statements following their election in October 2015 that “Canada is back” reflect a global strategy that is likely to give a boost to Canada-Latin America relations.  Canada never “left” the Americas during the decade of Conservative governments led by Prime Minister Harper, but the new administration is patching up its predecessors’ mixed record.  Building on the Americas Strategy launched in 2007, Ottawa signed new bilateral free trade agreements with Colombia, Peru and others; broadened its engagement in regional security affairs; and greatly increased its whole-of-government engagement in Haiti.  Canada played a major role at the Summit of the Americas in Panama (April 2015) and hosted the Pan American Games (July 2015).  Yet the revelation of Canada’s espionage in Brazil, visa restrictions on Mexicans, the poor reputation of some Canadian mining firms in the region, and its inability to reach a trade agreement with the Caribbean Community fed a growing desencanto in Canada’s relations with the region.

Through mandate letters issued to ministers in late 2015, the Trudeau government made clear that the Americas would remain an important priority, despite renewed emphasis on Asia and Africa, and that inclusive growth, the responsible governance of Canadian extractive activities abroad, and women’s and indigenous peoples’ rights would get emphasis in the region.  In June, Canada hosted the “Tres Amigos Summit” with NAFTA partners United States and Mexico.  Ottawa also announced that by December, Mexican citizens would no longer need visas to enter Canada, removing a big irritant in Canada-Mexico relations.  The government reaffirmed its partnership with Colombia by indicating its desire to make bilateral free trade more inclusive and announcing projects to support the implementation of peace accords.

  • Ottawa has opportunities for deeper involvement in these countries. In Mexico, Canadian interests will be served through a better balance between pursuing economic opportunities in sectors like petroleum and supporting Mexicans struggling to strengthen rule of law in a system compromised by corruption.  Colombia also requires a sophisticated whole-of-Canada engagement strategy, particularly since the failure of its referendum on the peace accords on Sunday.  Ottawa has signaled interest in continuing to support the rule of law and broader development in Haiti, but Trudeau’s ability to justify large expenditures there will depend on the completion of legitimate elections by February 2017.

Ottawa’s appointment of a new Ambassador to the Organization of American States (OAS) and commitment to revitalizing it as “the premier multilateral organization of the Americas” points to broader engagement on a regional level.  The Trudeau administration could join the Latin American and Caribbean trend on drug policy by decriminalizing the sale of marijuana at home and supporting reforms to OAS and UN counterdrug programs.  Assisting the implementation of the UN Small Arms Treaty, which Ottawa is poised to ratify, could also contribute to rule of law and security in the Americas.  Canada will also find many partners (from Chile to Costa Rica) to promote gender equality.  With regard to First Nations, Ottawa may be tempted to focus on funding new aid projects; yet Canada’s credibility will remain suspect until it ratifies the American Convention on Human Rights and ensures that all Canadian mining firms respect the rights of indigenous communities to free and prior informed consent in large-scale extractive activities.  The Trudeau government will probably monitor the multi-dimensional crisis in Venezuela, the situation in Brazil, and other challenges in the region – over which it probably lacks the leverage to make a significant difference but can lend moral authority to solutions.  Given its clear commitment to a global, rather than regional, strategy, the current administration is wise to carefully select entry points on which its thematic priorities align with opportunities in particular countries.

October 5, 2016

* Stephen Baranyi is an Associate Professor at the University of Ottawa’s School of International Development and Global Studies.  He also chairs the Latin America and Caribbean Group (LACG) of the Canadian International Council.  The author acknowledges his LACG colleagues’ input into this blog, while taking responsibility for its limitations.

Canada-Cuba Relations Poised for Progress under Prime Minister Justin Trudeau

By John M. Kirk*

Cuba Canada

Photo Credits: Wisegie/ Flickr / Creative Commons, Pixabay / Creative Commons

After a decade of ignoring Cuba under the government led by Stephen Harper, Canada is on the cusp of an era of a significant improvement in bilateral relations with the island.  Many constants supporting this longstanding relationship remain: Canada, along with Mexico, was the only country in the Western Hemisphere not to break relations with revolutionary Cuba in 1962; Pierre Trudeau was the first leader of a NATO country to visit Cuba (1976) and developed a strong friendship with Fidel Castro (who was an honorary pall-bearer at his funeral); Canadians make up the largest tourist group (1.3 million a year) there; and the largest single foreign investor in Cuba is the Canadian firm Sherritt International.

Justin Trudeau, elected prime minister in October 2015, has undertaken several significant foreign policy initiatives, mainly in Asia and Europe.  Steps to improve relations with Cuba have been taken slowly, but are noticeable.  In May Cuban Foreign Minister Bruno Rodríguez visited Ottawa and Quebec City, while Canada’s Minister of Tourism Bardish Chagger attended the International Tourist Fair in Havana, at which Canada was the “invited country of honor,” reciprocating an earlier visit by her counterpart.  In December the Canadian Senate held a special session to celebrate the 70th anniversary of diplomatic relations.  Canada has been invited as the country of honor to the International Book Fair in Havana, in March 2017, and it is rumored that Trudeau will shortly visit Cuba.  Significantly, the gradual improvement of bilateral relations is due mainly to Canadian initiatives, and not to developments in the U.S.-Cuba relationship.

  • Investment and trade, however, have not kept up with diplomatic initiatives. Annual bilateral trade remains about $1 billion, mainly because of uncertainty over Cuba’s economy.  Canadian business has yet to take advantage of its privileged relationship, concerned with existing U.S. legislation and the looming wave of U.S. investment once the embargo is lifted.

After a decade of neglect, Canada and Cuba have the potential to rediscover their deep-rooted ties.  Trudeau’s willingness to work with Cuba and his diplomatic initiatives were unthinkable under the Harper government.  A complicating factor for business has been the arrest and imprisonment of two Armenian-Canadian entrepreneurs, found guilty of corruption.  Canadian civil society ties remain strong, with Canada making up 43 percent of tourists to Cuba.  Again, however, concern exists at how Canadian tourists face skyrocketing prices when Americans are allowed to visit the island.  In sum, Canada-Cuba relations are at this point characterized by political commitment to improve ties, largely untapped commercial potential, and anxiety about the ramifications of closer U.S. ties with Cuba.  The big question is whether Canadian trade and investment will provide the energy to propel relations beyond their special past status into a new era of collaboration.

August 8, 2016

*John M. Kirk is Professor of Latin American Studies at Dalhousie University in Canada.  He is the author/co-editor of 16 books on Cuba, and also works as a consultant on investment and trade in Cuba.

How are the Americas Faring in an Era of Lower Oil Prices?

By Thomas Andrew O’Keefe*

Gas Station Guatemala

Photo Credit: Josué Goge / Flickr / Creative Commons

The sharp drop in global oil prices – caused by a combination of a slowing Chinese economy hurting commodities sales and efforts by Saudi Arabia to retain market share – has both downsides and advantages for Latin America and the Caribbean.  By keeping production levels steady, despite decreased demand, so that a barrel of crude remains below US$40, the Saudis’ hope is to put U.S. shale oil producers and Canadian tar sands producers out of business.  The drop in oil prices has had a varied impact elsewhere in the Americas:

  • The effect in Venezuela, already reeling from over a decade of economic mismanagement, has been catastrophic. The ripple effect is being felt in those Caribbean and Central American countries that grew to depend on PetroCaribe’s generous repayment terms for oil imports that allowed savings to be used for other needs.  In 2015, for example, this alternative funding mechanism in Belize was slashed in half from the previous year.  The threat of interest rate hikes on money that must eventually be repaid for oil imports also pushed the Dominican Republic and Jamaica to use funds raised on international capital markets to reduce their debt overhang with Venezuela.  (For those weening themselves off PetroCaribe dependency, however, the lower prices are a silver lining.)
  • Low oil prices have also knocked the wind out of Mexico’s heady plans to overhaul its petroleum sector by encouraging more domestic and foreign private-sector investment.
  • In South America, the decline has undermined Rafael Correa’s popularity in Ecuador because the government has been forced to implement austerity measures. The Colombian state petroleum company, Ecopetrol, will likely have to declare a loss for 2015, the first time since the public trading of its shares began nine years ago.  In Brazil, heavily indebted Petrobras has seen share prices plummet 90 percent since 2008, although that is as much the result of the company being at the center of a massive corruption scandal that has discredited the country’s political class.
  • On the other hand, lower petroleum prices have benefitted net energy importers such as Chile, Costa Rica, Paraguay, and Uruguay.

The one major oil producer in the Americas that has not cut back on production and new investment is Argentina – in part because consumers are subsidizing production and investment by the state petroleum firm YPF, which was renationalized in 2012 and now dominates domestic end sales of petroleum products.  Prices at the pump remain well above real market values.  While successive Argentine governments froze energy prices following the 2001-02 implosion of the Argentine economy, this time policy is keeping some energy prices high.  This encourages conservation and efficiency and spurs greater use of renewable alternatives, but it becomes unsustainable during a prolonged dip because it will, among other things, make the country’s manufacturers uncompetitive.  The Argentine example underscores that predictions of a pendulum shift in Latin America in favor of private-sector investment in the hydrocarbons sector over state oil production are still premature.

The lower prices do not appear likely to harm the region’s continuing substitution of natural gas for coal and oil as a transitional fossil fuel to greener sources of energy.  Natural gas prices remain at their lowest levels in over a decade, and the expansion of liquefied natural gas plants allows for easier transport of natural gas to markets around the world.  They are also unlikely to dent the global shift to greater reliance on renewable energy resources driven by the international consensus that climate change can no longer be ignored and something must be done to address it.  At the UN climate change talks in Paris last December, for example, countries agreed to keep temperature increases “well below” 2 degrees centigrade above pre-industrial levels and made a specific commitment “to pursue efforts” to achieve the much more ambitious target of limiting warming to no more than 1.5 degrees centigrade.  The year 2015 was the second consecutive year in which energy-related carbon emissions remained flat in spite of 3 percent economic growth in both years. 

March 24, 2016

*The author is the President of San Francisco-based Mercosur Consulting Group, Ltd.  He chaired the Western Hemisphere Area Studies program at the U.S. State Department’s Foreign Service Institute between July 2011 and November 2015.

OAS: New Leadership, Old Challenges

By Aaron Bell and Fulton Armstrong

José Miguel Insulza and Luis Almagro Lemes Photo Credit: OEA - OAS / Flickr / Creative Commons

José Miguel Insulza and Luis Almagro Lemes Photo Credit: OEA – OAS / Flickr / Creative Commons

Uruguayan diplomat Luis Almagro, elected secretary general of the Organization of American States (OAS) last week, says he wants to revitalize the hemispheric organization – a herculean, if not impossible, task.  Almagro was the only candidate remaining after Guatemalan Eduardo Stein and Peruvian Diego García-Sayán withdrew from the race – the former for health concerns, and the latter due to a perceived lack of support from his government.  Almagro previously served as Foreign Minister under former president José Mujica and is a member of his Movimiento de Participación Popular, whose left-leaning sympathies led observers to wonder whether Almagro could draw sufficient backing even running unopposed.  But Almagro received formal support from several prominent nations ahead of time, including Brazil, Argentina, Mexico, and the United States, and he got 33 of 34 votes (Guyana abstained) to secure his election.  Following the election, U.S. Deputy Secretary of State Antony Blinken called for the new Secretary General to “lead the OAS through this genuine reform process by helping to refocus the OAS on its core pillars – democracy, human rights, sustainable development, and citizen security,” all while resolving its fiscal challenges.  “We look to [him] for his leadership, but we want him to know that he does not stand alone.”  His five-year term begins in May.

In his acceptance speech, Almagro stated that he intends to rise above the role of crisis manager and facilitate “the emergence of a revitalized OAS,” but major challenges await him:

  • The political crisis in Venezuela has long challenged the OAS, and an escalation in sanctions and rhetoric from the United States has made its balancing act harder. Current Secretary General José Miguel Insulza criticized the Obama administration’s national security warnings while also calling out the Maduro government for the arrest of opposition leader Antonio Ledezma and its resistance to dialogue with the opposition.  Almagro has been critical of U.S. sanctions as well, and quietly worked behind the scenes to encourage negotiations between political opponents in Venezuela, but his public silence on abuses by the Maduro government worries his critics.
  • The Cuba issue will also put Almagro in a tight spot. Havana’s participation in the Summit of the Americas is likely to build pressures for its readmission to the OAS, and Almagro’s record shows he’ll be sympathetic.  But the process could be fraught with risks for the new Secretary General.  Outgoing Secretary General Insulza bears scars attesting to U.S. Senators’ penchant for personalizing attacks when the OAS doesn’t go their way.
  • Any reform agenda is going to get battered from both sides. The OAS mandates are broad and expensive, and members don’t agree on priorities.  As Deputy Secretary Blinken’s comments suggest, Washington wants the organization to focus on its agenda, but much of South America, particularly the ALBA countries, wants the OAS to pull away from U.S. influence.  Nor do differences lie strictly along North-South lines, as made clear by protests during last year’s general assembly against Brazil’s resolution condemning discrimination based on sexual orientation and gender identity.

Almagro seems to have the experience and temperament to be an excellent choice for the job, and his coming from Uruguay, whose good offices have credibility virtually everywhere, may serve the OAS well.  But the challenges will be daunting.  He faces several ongoing crises, particularly in Venezuela, and ongoing splits within the region over the OAS’s role.  One tempting option would be for Almagro to try to distance himself and the organization from Washington – a difficult task at best.  Not only is his headquarters several hundred meters from the White House and the State Department, but the United States government (and to a lesser extent Canada) provides substantially more funding for the OAS’s general fund and through special donations than any other member state.  Almagro’s actions will also be watched closely by U.S. conservatives who, stung by President Obama’s move toward diplomatic relations with Cuba, are looking for a fight over Venezuela, Ecuador, Argentina, and even on some issues with Brazil.  Whatever Almagro does, it will be with the black cloud of the OAS’s financial difficulties over him, and the possibility that failing to successfully balance all of these issues may weaken the OAS and benefit regional organizations like CELAC and UNASUR, which are smaller and less well established, but independent of North American influence.

March 23, 2015

The Impact of Falling Oil Prices on the Western Hemisphere

By Thomas Andrew O’Keefe*

L.C. Nøttaasen / Flickr / CC BY-NC 2.0

L.C. Nøttaasen / Flickr / CC BY-NC 2.0

The sharp drop in the benchmark Brent crude price of oil from just under US$115 per barrel in June 2014 to its current perch around US$50 has important ramifications for the Western Hemisphere.  For Venezuela, which earns some 95 percent of its foreign exchange from petroleum exports, it is a potential disaster.  Underlying political tensions will be exacerbated if there is no money to continue funding social welfare programs or heavily subsidizing gasoline.  It probably also spells the end of PetroCaribe’s generous repayment holidays and what are in essence below-market interest loans for Caribbean and Central American nations.  Sharply lower oil prices also put at risk major energy projects such as the development of Brazil’s pre-salt reserves, which require a minimum price of $50 to $55 to be economically viable.  Equally tenuous are Argentine efforts to regain energy self-sufficiency by exploiting its vast shale oil and gas reserves and Mexican plans to attract foreign investors to participate in deep-water oil exploration and drilling.  The minimum price for a barrel of oil below which new investment projects in Canada’s oil sands are no longer attractive is around $65.  Shale oil producers in the United States are also being squeezed by low petroleum prices.

On the other hand, net energy importers such as Chile, Paraguay and Uruguay benefit from sharply lower oil prices.  Although being weaned off  PetroCaribe will be painful for the Caribbean and Central America in the short term, they will be able to seek oil at the lower prices elsewhere.  The pressure on the Obama administration to lift the ban on U.S. crude oil exports, in response to a glut of domestic shale oil production, could also redound in favor of the Caribbean and Central America by lowering international oil prices further through increased global supply.  Already, 2015 began with U.S. companies authorized to export an ultralight crude called condensate.

In hopes of rallying OPEC to stabilize oil prices, Venezuelan President Maduro last weekend rushed off to lobby Saudi Arabia, which just two months ago refused to decrease production in order to raise prices, but oil industry sources say there’s little chance of a policy change.  Meanwhile, the environment may turn out to be among the biggest beneficiaries of lower oil prices.  Less investment in shale oil production reduces the risk of leaks of methane, a potent greenhouse gas, as well as decreases flaring.  Similarly, slowing down oil sands production in Alberta and Saskatchewan means that the very high levels of greenhouse gas emissions associated with extracting crude oil from bitumen (not to mention the negative impact on water resources) is diminished.  Although lower fossil fuel prices traditionally have undermined incentives to move to greater reliance on renewable and non-traditional energy resources, this may no longer be true.  For one thing many governments around the world are now embarked on ambitious efforts to reduce carbon emissions by, among other things, raising the costs associated with petroleum usage through cap and trade regimes that force companies to buy government-issued pollution permits.  Still others have enacted outright carbon taxes on utilities and large factories per metric ton of carbon dioxide emissions.  In addition, the heavy initial capital investment that was previously associated with things like wind, solar and geothermal power are falling.  For example, a combination of technological advances and Chinese overproduction have resulted in much lower prices for solar panels so that the cost of generation from a large photovoltaic solar plant is now almost 80 percent less than five years ago.  Geothermal energy may be the renewable that most benefits as drilling rigs idled by lower oil prices are now available at a lower cost for geothermal projects.  

*Thomas Andrew O’Keefe is President of San Francisco-based Mercosur Consulting Group, Ltd. and teaches at the Villanova University School of Law.

January 13, 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

Middle Class Abandons Public Education

By Osvaldo Larrañaga*

Photo credit: NoticiasUFM / Foter / Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

Photo credit: NoticiasUFM / Foter / Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

Seven of the most developed countries of Latin America – Argentina, Brazil, Chile, Colombia, Costa Rica, Peru and Uruguay – are experiencing an exodus of the middle class from public schools to private schools.  In Clases Medias y Educación en América Latina, my colleague María Eugenia Rodríguez and I present evidence that in these countries private schools offer primary and secondary middle-class students better opportunities to learn, better resources, and in almost every country a more disciplined learning environment.  However, the shift may worsen the region’s already deep inequality because private education is likely to multiply inequality.  Private schools show signs of high levels of social segregation, with implications for countries’ social cohesion and development.  On average, 87 percent of the students in these schools belong to the same social class (be it middle- or upper-class), as compared to 42 percent in the public schools.  According to our research, the challenge for governments is to strike the balance between allowing families to give children the best education they can and ensuring social cohesion and equity.

Some countries outside Latin America have achieved this virtuous balance. In the Netherlands, Belgium and Ireland, governments finance private schools so that families’ financial resources are not a factor in school selection.  In those countries, 60-70 percent of students from different social classes attend private schools, with excellent academic results.  Dutch and Belgian students place at the top in the Program for International Student Assessment (PISA) test, while Irish students score at the average of the OECD nations.  Another model – in Finland, Canada and New Zealand – produced the highest PISA scores outside Asia.  In those countries, 93-97 percent of students attend public schools, proving that public management of education is not incompatible with excellence.

Another key development needing attention in the region is that the number of students in higher education has tripled in the past 15 years as the middle and emerging classes see education as the most effective means for social mobility.  Increased demand for tertiary education has been covered primarily by private rather than public institutions, yet governments have done little to ensure the quality of the education students receive or to assist them in financing it.  Failure to address these issues invites a scenario that could result in frustration and social tensions.  Our research indicates that the problem – and its solution – has three principal aspects: the need to create information systems that enable the evaluation of graduates; the need to introduce mechanisms for financial aid for students attending private institutions; and the need for an accreditation process that ensures that financial aid goes to students attending quality institutions of higher education.  With such reforms, Latin America stands a much better chance of advancing social equity even while relying increasingly on the private provision of education.

*Dr. Larrañaga coordinates the poverty and inequality reduction area at UNDP in Chile.

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.