CELAC: Losing Relevance?

By Michael M. McCarthy

Presidencia de la República del Ecuador / Flickr / Creative Commons

Presidencia de la República del Ecuador / Flickr / Creative Commons

The announcement by Presidents Obama and Castro of their intention to normalize diplomatic relations could leave a big hole in the agenda of the Community of Latin American and Caribbean States (CELAC), which met January 28-29 for its third heads of state Summit in San José, Costa Rica.  Raúl Castro kicked off last year’s summit, in Havana, with a speech decrying the United States NSA spying scandal.  In San José, he moderated his tone, noting that “our America has entered a new era” since CELAC was founded (2010) while also calling on the U.S. to end the trade embargo – a point other member states echoed – and to return the naval station at Guantanamo Bay.  In concrete terms, the results of last week’s CELAC summit were modest.  The technocratic goals of quantifying progress on poverty and technology development announced by Ecuador, the group’s 2015-2016 President Pro-Tempore, suggest no major changes are imminent.

Since President Chávez’s death March 5, 2013, the former leader’s Bolivarian vision of Latin American and Caribbean integration and unity has shown signs of weakening.  CELAC now faces even tougher challenges defining and defending its identity and mission beyond the creation of a common political space for regional decision making insulated from the U.S. and Canada.  With Chávez’s successor, President Nicolás Maduro, losing support amid economic crisis, the Alianza Bolivariana para los Pueblos de Nuestra América (ALBA) can no longer throw its weight around on the international scene.  Cuba’s inclusion in the Summit of the Americas – increasing the likelihood of its participation in the OAS – is a major achievement but represents the loss of a major rallying point. 

Going forward, three issues will determine the groups trajectory.  The Cuba issue wont go away suddenly, but rapid change in U.S.-Cuba ties could reset hemispheric relations and leave CELACs mission muddled and potentially irrelevant.  Disagreement among CELAC members over issues such as Puerto Ricos status may create tensions, as they did when Nicaraguan President Daniel Ortega gave the island a high profile during the presidential plenary underlining the risks inherent in the unity within diversity principle embraced by CELAC.  (Ecuadoran President Correa, another ALBA supporter, chided Ortega.)  But perhaps the biggest determinant of the groups future relevance lies in its emerging relationship with ChinaA CELAC-China foreign ministers forum met in Beijing last month, formalizing the Asian nations relationship with CELAC.  The forum announced the 2015-2019 China-CELAC cooperation plan calling for the doubling of two-way trade and the increasing of Chinese investment in the region to $250 billion.  Exclusion of the U.S. and Canada may remain a tenet of CELACs platform, but the groups leaders may judge that its long-term relevance can be rescued by reaching out to China instead.

February 2, 2015

*Michael McCarthy is a Research Fellow with the Center for Latin American and Latino Studies.

Post-Snowden Challenges for U.S. Information and Communication Technology Firms

By Robert Albro

infocux Technologies / Flickr / CC BY

infocux Technologies / Flickr / CC BY

A year after Edward Snowden’s dramatic disclosures about NSA surveillance in Latin America, U.S. companies hoping to make inroads into the region’s fast-growing information and communication technology market are running into increasing obstacles.  If the political costs were immediately forthcoming, especially in Brazil, the fallout for Silicon Valley’s tech giants has taken longer to assess. The biggest problem is the lingering lack of trust resulting from the revelation that the U.S. companies enabled the NSA’s eavesdropping by giving it direct access to their servers.  A 2014 NTT Communications survey found that, in response to the Snowden affair, 88 percent of information and communication technology decision-makers around the world, including Latin America, have changed their buying behavior around large-scale data storage.  In Brazil, Argentina, Mexico and Chile, “data sovereignty” has become a major issue, in the form of new data privacy and disclosure laws now shaping the direction of the region’s developing market.

According to the Information Technology & Innovation Foundation, U.S. software firms are expected to lose $35 billion in sales overseas through 2016. Forrester Research, an independent technology and market research company, puts potential losses as high as $180 billion.  Latin American investors have been questioning the wisdom of using US data storage companies, and established U.S. dominance in the cloud computing sector has already taken a hit. Cisco’s last quarterly earnings, for example, were down 7 percent – 27 percent in Brazil – even as the cloud computing market in Latin America is predicted to grow at a 26 percent clip through 2018.  The emergence of Miami as a major global tech hub and gateway to Latin America’s fast-growing information technology markets is threatened by a proposed EU-Brazil trans-Atlantic cable to circumvent the city as a key node for Latin American access to the global internet.  As investor e-news service 4-Traders has reported, Chinese tech giants like Baidu, Alibaba and Tencent are establishing and expanding beachheads in Latin America, while China’s government pursues cooperative partnerships with Latin American counterparts to accelerate the development of the region’s information infrastructure.  Meanwhile, US-based data mining and analytics firms like Choicepoint Inc., currently major players in the region’s business intelligence and online security markets, have become the subject of investigation by skeptical governments and privacy advocates in the region.

The U.S.-centric view of the internet as “free and open,” a basic feature of the business model of U.S. tech firms, is being challenged in Latin America, where the regulatory balance between free expression and privacy is increasingly tilting toward the latter.  Despite the fact that the region’s online population is the world’s fastest growing and that it boasts a dynamic tech start-up movement, U.S. internet technology firms should expect more such challenges.  Regional trends in internet governance are largely anti-American, focused on displacing U.S. commercial dominance of the internet, and promoting open-source software as alternatives to U.S. products and services.  As Latin America builds out its cloud computing market, it is doing so in ways poised to compete and not collaborate with U.S. companies.  Privacy controls and requirements to conform to local laws already create new and costly disincentives for U.S. companies, which might opt to pull up stakes.  Meanwhile, business models for Latin American start-ups are not copycatting U.S. models as frequently as in the past.  If Latin American entrepreneurs have maintained close ties with U.S. centers of innovation and investors, they are now more focused on developing their own intellectual property, instead of technology transfer, to meet specific demands of their local and regional markets.  What just yesterday seemed wildly improbable – that U.S. tech giants might lose their edge in Latin America – has become a credible scenario.

October 23, 2014

Brazil-U.S.: Implications of postponed state visit

By Luciano Melo

Picture2The postponement of Brazilian President Dilma Rousseff’s state visit to Washington was officially cast as the consequence of the lack of a good explanation for the National Security Agency’s cyber-espionage targeting her, the cabinet, Petrobras (the national oil company), and others.  Although the Brazilian Foreign Ministry issued a letter stating that both countries agreed to the postponement, Dilma’s remarks at the UN General Assembly on September 25 about NSA’s activities were so harsh that it was clear that frustration with the Americans’ widespread spying on Brazilians remains extremely high in Brasilia.

Experts agree that economically the postponement and bilateral tensions hurt the United States more than Brazil.  Contracts worth billions of dollars between Boeing and the Brazilian air force (FAB) are at stake, as are agreements that would favor cooperation in oil exploration and development of biofuels and others that would facilitate the transfer of “sensitive technologies.”  For Brazil, on the other hand, the postponement jeopardizes progress in talks to allow Brazilian citizens to enter the United States without visas – a project long-desired by Brazilians that was on the agenda for the state visit. Some observers in Brazil also speculate that, with the overall Brazilian economic slowdown, Dilma may actually prefer to have Brazilians spending their reais at home, not in the United States.

In a tactical sense, Dilma may have feared that Edward Snowden will leak more damaging information during her visit to the U.S., causing her even greater embarrassment at home and abroad.  In this way, fear and self-protection certainly played a role in her decision. On the other hand, the Brazilian president almost certainly saw domestic political advantages in a good old fight between the Brazilian David and the American Goliath.  She is desperately in need of boosting her popularity after the demonstrations against corruption in the country.  In fact, opinion polls show that public approval of her leadership increased from 45 to 54 percent just since the NSA dustup.

In strategic terms, the postponement fits Brazil’s strategy for claiming its position as a global player – and expressing unhappiness when it feels frustrated.  Dilma already had told President Obama in 2011 that Brazilians would seek a “more balanced relationship” with the United States. The postponement, like the speech at the UN, clearly reflects Brazilians’ desire to be treated better by the United States.  Obama’s speech at the General Assembly the same day, on the other hand, was interpreted by many Brazilians as emphasizing the United States’ traditional role as world policeman – not as the respectful neighbor in a new, multi-polar world order.  In this battle of self-images, Brazil sees itself as one of the global leaders, while the United States sees itself as the mighty one, considering only the European powers as full equals.  The broad base of Brazilians that Dilma is reaching out to is not “anti-American” in sentiment, and indeed wants a robust and respectful U.S.-Brazil relationship.  That is in the interest of both countries, but for this shared objective to be achieved, Washington will need to recalibrate its responses to Brazilian concerns.

Luciano Melo is a PhD candidate in the Department of Government at American University.

Snowden’s Revelations Rile Latin America

"Snowden Day in Brasilia, Brazil" Photo credit: midianinja / Foter / CC BY-NC-SA

“Snowden Day in Brasilia, Brazil” Photo credit: midianinja / Foter / CC BY-NC-SA

Allegations by former U.S. intelligence officer Edward Snowden about U.S. operations in Latin America have stirred further recriminations toward Washington.  According to press reports, Snowden revealed that U.S. agencies monitored internet traffic, especially in Colombia (with a special focus on the FARC guerrillas), Venezuela, Brazil and Mexico.  The National Security Agency (NSA) allegedly spied on military procurement and the oil industry in Venezuela, as well as the energy sector and political affairs in Mexico.  The Huffington Post reported that almost every Latin American country was targeted to one degree or other.

Regional reaction has been strong:

  • O Globo (Brazil) columnists, claiming that Brazil was the most spied upon country in Latin America, called the surveillance a genuine invasion of privacy that undermines both Brazilian authorities and citizens.  Former President Cardoso said, “If such activities existed, if they were done, as with all espionage, it was outside the law.”  The Senate has already “invited” Cabinet ministers to testify – and they have pledged to investigate.  (It also invited U.S. Ambassador Tom Shannon, but he is under no obligation to appear before the Brazilian Congress.)
  • El Espectador (Colombia) said the U.S. spying was an attack on Colombian sovereignty.  It quoted various senators as saying that “one does not spy on one’s friends and even less when they’ve been political allies in big decisions between states” and demanding that the government limit such activities.  Foreign Minister Holguín sent a delegation to Washington to seek explanations.
  • Mexican President Peña Nieto called the U.S. spying “totally unacceptable,” and the opposition PRD has accused the government of being “too soft” in its response to the alleged espionage.
  • The ALBA countries have been strident.  Venezuelan President Maduro has demanded “answers and explanations, [and] more than explanations, apologies.”  Ecuadoran President Correa said “we will put up with no more abuses, arbitrariness, disrespect for human rights.”

The extent of U.S. intelligence operations will not be known for decades.  It took experts 30 years, for example, to pry loose information about the CIA’s role in the coup that brought Chilean strongman Pinochet to power.  But the tensions such allegations create do not fade rapidly.  Even accounting for hyperbole in political rhetoric, these protestations cannot be helpful to U.S. short-term efforts to win Latin American help in capturing Snowden, nor in long-term efforts to revive the Obama Administration’s stated goal of building “partnership” in the region.  Continued threats – thinly veiled – from unnamed senior U.S. officials also run counter to that goal of building partnership and the related objective of minimizing fallout from accusations of spying.