Latin America: Impact of the January 6 Insurrection at the U.S. Capitol

By Ilka Treminio Sánchez, Fábio Kerche, and Esteban De Gori*

Tear gas outside the U.S. Capitol on January 6, 2021/ Tyler Merbler/ Wikimedia Commons/ Creative Commons License

AULABLOG invited three Latin American experts to comment on the impact of the events in Washington, DC, last month on U.S. relations with the region.

Ilka Treminio Sánchez*

During the Trump Administration, the United States revealed regrettable signs of institutional erosion and democratic backsliding. The political engine that allowed and promoted these actions was based on polarizing political discourse that shaped a hostile atmosphere toward Trump’s and his supporters’ opponents. This behavior escalated to the point of attacks on the electoral results and the violent assault on the Capitol by Trump’s followers on January 6, the day Joe Biden’s victory was certified. The insurrection failed as institutions upheld the legitimacy of the electoral process and the popular will of the citizens.

For Latin America, and for Central America specifically, this episode signifies the rupture of the myth of democratic exceptionalism in the United States. It reveals U.S. fissures and defects that are characteristic of the hemisphere’s weakest democracies. Central America has many times experienced authoritarianism, populism, violence against the adversary, social violence against ethnic groups, attacks on Congress, and attempts to alter electoral results. The Trump Administration’s actions have seriously damaged the United States’ image as a country that guarantees democracy – and its future governments could lose moral authority in the region on this matter.

  • The January 6 assault could give new life to undemocratic “zombie ideas” in Central America, undermining progress in political and civil rights made in the last decades. It could further embolden efforts to weaken election processes and increase presidential authoritarianism already present in the region.

Fábio Kerche*

The insurrection at the U.S. Capitol and President Trump’s campaign to overturn the electoral results were a sad scene for more than just the United States. Democracy is the regime in which a government can be defeated in an election and then leaves office peacefully. The events in Washington revealed that, even in a country in which democracy was a consolidated regime, it is vulnerable – with profound implications for younger and more fragile democracies worldwide. This includes Latin America and particularly Brazil.

  • It is important to remember that the Brazilian political crisis started when the runner-up in the 2014 presidential elections challenged the results. Fortunately, the U.S. political institutions were still strong enough to overcome the impasse in Washington. The United States’ most recent crisis gives Latin Americans cause to consider what should and should not be done to protect and consolidate democracy across our continent. In Brazil, where President Jair Bolsonaro is trying to reproduce Trump’s style, the failure of the U.S. Capitol insurrection – and the triumph of the country’s Constitutional order – should discourage any imagining that there is a way out of democracy.

Esteban De Gori*

The insurrection was undoubtedly shocking for South America. No government and no citizenry had imagined that a group of persons could occupy the U.S. Capitol as they did, nor that challenges to U.S. electoral processes could be so intense. Among the most powerful events: persons supported by the President overrunning the building and deepening the runaway polarization; the struggle of the democratic system to overcome the challenges to the electoral competition; and, perhaps most profoundly, the erosion of popular faith in the system. Leaders in most of Latin America, with the exception of Venezuela and perhaps others, showed concern and surprise. A crisis afflicting a great geo-economic player in the context of a pandemic and trade war with China could bring greater uncertainties and risks and, especially now, few opportunities.

  • The insurrection and the singularly belligerent government of Donald Trump are not the only things driving reassessment of the United States as a promoter of democracy and the rule of law. Since 2008, to take the financial crisis as a point of reference, doubts about the effectiveness of the country’s political system have deepened. That discomfort helped bring Trump to power as it eroded faith in the political system and its ability to balance desires and demands. The early statements and actions of the Biden Administration suggest awareness of this discomfort and willingness to begin addressing it.
  • The events (and Biden’s efforts to overcome them) do not appear likely to significantly change the U.S. relationship with Latin America. The pandemic and other challenges to democracy have placed extraordinary pressure on the region’s leaders, for whom the images of U.S. insurrection may have engendered even a certain empathy. They now know that parliaments and democratic institutions can be illegally occupied; that debate can go horribly awry; that polarization can seriously deepen in any country of the hemisphere.
  • More than the turmoil in Washington, the pandemic and its economic consequences appear likely to influence U.S.-Latin America relations. Joe Biden will probably remain focused on the country’s customary interests in the region – no great changes – although with less belligerence than Donald Trump. China, the other great regional power, will continue to promote its position without big conflicts or stridency. Even if the United States retains its economic edge in Latin America, its problems – and China’s gradual expansion in the region – put Washington on the downward path typical of a great power in decline.

February 11, 2021

* Ilka Treminio Sánchez is the director of La Facultad Latinoamericana de Ciencias Sociales (FLACSO) in Costa Rica, and a lecturer and researcher at the University of Costa Rica, specializing in electoral processes, political behavior, presidential reelection, and Latin American comparative politics.
* Fábio Kerche is a professor at UNIRIO and IESP-UERJ in Rio de Janeiro. He was a CLALS Research Fellow in 2016-2017.
* Esteban De Gori teaches sociology at La Universidad de Buenos Aires and is a researcher at Argentina’s Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET).

South American Megacities, Water Scarcity and the Climate Crisis

By Robert Albro*

Drinking water distribution/ MunicipioPinas/ Flickr/ Creative Commons License

Access to fresh water has become a regular flashpoint throughout Latin America, particularly in its largest cities, and threatens to trigger tensions and even war. Sixteen of the region’s 20 largest cities are experiencing water-related “stress,” and three of its largest – Sao Paulo, Lima, and Mexico City – are in danger of running out of water completely in the near future, according to reliable sources.

  • In 1995 World Bank vice president Ismail Serageldin presciently warned that future wars would be fought over water. The 2000 Water War in Cochabamba, Bolivia, kicked off an era of social mobilization around chronic water shortages and control over access to fresh water. Protests against the privatization of water have become common – in Colombia in 2013, Ecuador in 2014, Brazil in 2015, Chile in 2016 and 2019, Peru in 2019, and Mexico in 2020, among others.

Water challenges faced by some of South America’s megacities show that the urban water crisis is a wicked problem with no straightforward solution.

Lima: Peru’s capital is the second largest “desert city” in the world, after Cairo, receiving an average of 0.3 inches of rain annually. The coastal area in which it sits has 62.5 percent of the population but only 1.8 percent of its fresh water. It depends largely on three rivers fed by rapidly shrinking Andean tropical glaciers, reduced by 40 percent since the 1970s. As the glaciers vanish, water stress is expected to become “critical” for the more than 10 million inhabitants of Peru’s capital by 2025. Peripheral barrios are already significantly affected: An estimated 1.5 million of Lima’s residents already lack access to potable water. Shrinking glaciers are expected to dramatically worsen water inequality in many Andean cities, including Quito in Ecuador; Arequipa, Huaraz and Huancayo in Peru; and La Paz-El Alto, Cochabamba, Oruro, Potosí and Sucre in Bolivia.

Sao Paulo: In 2014, the worst draught in 250 years left Latin America’s second largest city less than two weeks away from running out of water, with reserves at 3 percent of capacity. Emergency rationing led to protests, and in 2018 it almost happened again. Brazil has more fresh water than any country on earth, but half is in the Amazon, where only 4 percent of its population lives, and deforestation in the Amazon – a giant water pump – reduces rainfall in Sao Paulo. The city’s watershed is also being deforested, ecologically degraded, and contaminated with large amounts of industrial wastewater. Its freshwater infrastructure is ill-equipped to handle these multiple stressors. Other Brazilian cities, including Rio de Janeiro and Belo Horizonte, face similar problems.

Santiago de Chile: While Santiago currently has adequate water and infrastructure for storage, treatment and distribution, underground aquifers are being depleted faster than they can be replenished, and climate change has introduced a destructive cycle of floods and droughts. The city’s water availability is expected to decline as much as 40 percent this century, and the urban population continues to grow. Oversight bodies have little influence over how water is delivered, compounded by extreme administrative fragmentation and poorly managed participatory reform efforts. High prices and poor service by the city’s privatized water company were a rallying cry of protesters in 2019. Improved water governance, along the lines of what Medellín, Colombia, has achieved, is possible and can dramatically improve water access and quality. But Santiago has much work to do.

In theory Latin America should not be experiencing a water crisis because it has 30 percent of the world’s fresh water but only 8 percent of its population. But it is highly unevenly distributed and concentrated in places where few people live. Glacial melt, deforestation, and inadequate water governance are all factors in why urban water scarcity has become a wicked problem.

  • Adding to the misery, as agricultural economies throughout much of the region collapse as a result of changing climatic conditions, urban in-migration is a continuing challenge. Combine this with poor and neglected infrastructure, unregulated industrial pollution, high levels of freshwater contamination, increasing social contestation around water access and management– and the problem looks daunting. Where Latin America’s urban water crisis is concerned, climate change is neither straightforward nor a stand-alone proposition, but rather part of a complex set of urgent crises that will require especially creative and imaginative problem-solving in the years to come.

February 9, 2021

* Robert Albro is an anthropologist and Research Associate Professor at CLALS.

Latin America: Moving Toward Active Non-Alignment?

By Jorge Heine*

IV CELAC Summit, Ecuador 2016/ FAOAmericas/ Flickr/ Creative Commons License (modified)

A new Cold War between the “great powers” outside Latin America – the United States and China – has again undermined the region’s ability to defend its own interests and given impetus to new ways of establishing its autonomy. The COVID‑19 pandemic has been a stark reminder of the human cost of playing favorites. Over 400,000 have died in Latin America, triggering what ECLAC has called the region’s worst crisis in a century. There is plenty of blame to go around – starting with China, where the virus originated, and continuing with the region’s incompetent management. But less remarked upon has been the U.S. role in contributing to this tragedy due to its obsession with all things Cuban and, more recently, Chinese.

  • In 2019, Washington strongly pressured the governments of Bolivia, Ecuador, and El Salvador to expel the teams of Cuban doctors working there. They complied just before the onset of the pandemic, leaving themselves without a critical mass of needed health professionals. At the same time, Washington slashed funding to the Pan American Health Organization (PAHO), leaving it unable to assist as it did in previous pandemics.
  • Ecuador, with 12,000 deaths, is Exhibit A of the effect, and Bolivia, with 8,000, is not too far behind. Brazilian President Bolsonaro’s agreement to withdraw Cuban doctors from the Amazon contributed to the decimation of Aboriginal tribes. Nonetheless, as the virus was ravaging the region, USAID refused to restore funding to PAHO. In addition to the humanitarian crisis, the region faces a projected negative growth of 8 percent in 2020, the worst performance of any region, and the prospect of yet another lost decade.

Alarm at the cost to Latin American governments of engaging in Cold War games is rising, inspiring support for what my colleagues Carlos Fortín, Carlos Ominami, and I call a policy of Active Non-Alignment for Latin America. Just as in the 1950s, when countries unwilling to choose between Washington and Moscow, between capitalism and socialism, formed the Non-Aligned Movement (NAM), the situation today requires some reassessing of international roles.

  • Any new configuration would reflect that the Global South, which represented 20‑30 percent of trade and investment flows in the 1960-70’s, now accounts for 50 percent. The enormous growth of countries from the Global South , particularly of China and India, but also Brazil (under former President Lula), Indonesia and Turkey, does not occur in a vacuum. It has coincided with a growing populism and protectionism in countries of the developed North, which have dismantled the very Liberal International Order they once created, and are now turning inwards.
  • In this emerging Global South, old platforms like the NAM are being replaced by new ones like the BRICS. The old diplomacy of the Cahiers des doleances has been overtaken by the collective financial statecraft of entities such as the Asian Investment and Infrastructure Bank (AIIB) and the New Development Bank (the so-called “BRICS Bank”). These developments suggest that, far from locking herself up within the confines of the Western Hemisphere, as the anachronistic application of a newly dusted-off Monroe Doctrine portends, Latin America will benefit more from opening up to this new “Post Western World,” in Oliver Stuenkel’s expression.

Active non-alignment is not the romantic resurrection of a bygone era, but rather adapting traditions to this new epoch, in a world in flux. It would expand, not limit, the ties of Latin American nations with the vast emerging non-Western world.

  • Genuine non-alignment does not surrender to any major power but focuses instead on the region’s own goals and objectives. For Latin America, it would entail strengthening regional bodies and deepening its commitment to multilateralism; developing an action plan on climate change; establishing a regional Center for Disease Control (CDC); redefining notions of national security to reflect today’s threats; and committing to gender equality and fair labor relations.
  • Chilean Foreign Minister Andrés Allamand has already expressed support for what he has called “active neutralism,” but sitting governments appear unlikely to take up such an unorthodox approach. Nonetheless, the next electoral cycle – in which ruling leaders are likely to pay a heavy price for the COVID debacles – will probably change many minds.
  • The Administration of U.S. President-elect Joe Biden will have its hands full with domestic challenges, and China, fully aware of the sensitive geopolitical situation in place today, does not expect Latin America to take Beijing’s side in its differences with Washington on issues that do not affect the region.  In this conjuncture,  Latin America is at a crossroads, and its current fragmentation and deep-seated crisis call for a fresh approach on how it relates to the rest of the world.

November 13, 2020

* Jorge Heine is Research Professor at the Frederick S. Pardee School of Global Studies, Boston University.

U.S.-Latin America: Who Can Learn from Whom about Elections?

By Todd A. Eisenstadt*

Polling station in the outskirts of San Cristóbal de las Casas in Chiapas, Mexico, during the 2003 gubernatorial election in Chiapas.
Polling station in the outskirts of San Cristóbal de las Casas in Chiapas, Mexico, during the 2003 gubernatorial election in Chiapas./ Dr. Todd Eisenstadt

The irony of an increasingly probable electoral crisis in the United States this year is not lost on observers in Latin America, who have endured multiple challenges to the legitimacy of elections for decades – nor is the irony that the United States could learn from the region’s hard, if still incomplete, lessons in democracy. U.S. President Donald Trump’s efforts to raise doubts about the fairness of the November 3 elections have been reported widely in Latin America. Citing unknown sources and unconfirmed events, he has alleged massive voter fraud and predicted court challenges so serious that, he said, it’s especially urgent that his nominee to the Supreme Court be seated immediately.

Such ominous-sounding challenges to elections are not new to most of Latin America. Mexico is not unique in this regard, but I saw its whimsical and exotic election frauds closeup in the 1980s and ‘90s as an international elections observer.

  • In the razor-close 1988 election, the lights went out during the vote count, and by the time they came back on the renegade outsider leftist had lost his lead against the PRI’s candidate. Political operatives called mapaches (“racoons” because they worked only in the dark), breakfast bribes (called Tamale Operations), and voters who made the rounds all day long to cast ballots in different precincts (carruseles or “carrousels”) were common. Crazy Mouse, named after the board game, was a scheme in which opponents of the PRI were sent from precinct to precinct only to be told they were to vote across town. Similar tricks, as well as intimidation, have been common in many other countries. Latin Americans are accustomed to wondering whether the military will have to escort a president who loses an election out the door, but it’s a totally new point of speculation for the U.S. population.

Although still far from perfect, Mexico and other Latin American countries have improved their elections. The unwritten code among political bosses in Mexico has long been to not ruin national institutions (like the postal system) or invite foreign interference (like Russian manipulation of public opinion). But other steps signal a shift away from zero-sum political games.

  • Since the 1990s, post-electoral negotiations to mollify the victors’ opponents – “keep them in the game” rather than make them a destabilizing force – gave them perches from which to eventually mount legal challenges, including rightist Vicente Fox (an interim governor who later became President) and current President Andrés Manuel López Obrador. The U.S. Supreme Court in 2010 in Citizens United reduced regulation of campaign donations, but Mexico has limited campaign finance and TV advertising. It has encouraged the independence of electoral institutions and set federal standards in all 32 states, which have one voter list matched against one voter ID per citizen – rather than 50 states and 3,000 counties with different criteria. Electoral observers are trained about citizens’ rights and responsibilities, not mobilized out of distrust for the system or to intimidate voters.
  • Since the turn of the century, most Latin American countries have put greater emphasis on the rule of law and tried, albeit inconsistently, to address economic inequality and other threats to democracy and stability. They have also learned the hard lesson that sometimes “dirty elections” must be cleaned through broad citizen mobilization with the support of national and international leaders. Some observers wonder whether the Black Lives Matter movement will expand and evolve into a mobilization akin to the cacerolazos in Chile and elsewhere in the 1980s that helped galvanize opposition to the dictatorships of the era.

The chaos, isolation, and economic pain caused by COVID‑19 make Latin America’s democracy lessons even more pressing for the United States. Voters fear going to the polls and are anxious about trusting balloting systems, such as mail-in voting, that President Trump is trying to delegitimize. The U.S. military, wittingly or not, mobilized troops to support the President’s suppression of civil protests. U.S. voters are in unfamiliar territory.

  • The hemisphere is watching closely if – and how – El Norte figures out how to exorcise the fears and the doubt that are undermining its democracy. Bringing in a slew of smart and seasoned international election observers from Mexico and elsewhere would be a start. So would learning from the Mexican opposition parties how to subvert expediency, especially in the time of COVID, in favor of longer-term discipline for democratization.

October 6, 2020

* Todd A. Eisenstadt teaches political science at American University and is author of several books on democratization, including Courting Democracy in Mexico: Party Strategies and Electoral Institutions, for which he observed over a dozen local and national elections there.

Tough Times in Latin America

By Andrés Serbin*

Protests in Chile

Protests in Chile/ Diego Correa/ Flickr/ Creative Commons License (not modified)

The year 2019 was an annus horribilis for Latin America, but 2020 – with its pandemic and economic slowdown – has more seriously worsened an array of structural challenges that will prompt even greater instability in the post-pandemic era. Last year’s meager and slowing economic growth, barely reaching 0.1 percent, prompted social protests that shook governments on both the left and right, driving a reconfiguration of the political map of the region. This year’s challenges will affect countries differently and more deeply.

  • The Informe Iberoamérica 2020, recently published by the Fundación Alternativas in Madrid, warns of the current and looming challenges to the region. Preexisting inequality has already been affecting stability, as have the growing demands and expectations, associated with advances made in previous years, of greater redistribution, and better public policies. The worst economic performance in 60 years deepened the structural problems of a region that has generally failed to diversify and develop productive structures and overcome its excessive dependency on exports of raw materials (and on Chinese demand for them). Low confidence in political institutions and disillusionment with political elites and leaders’ ability to meet citizens’ needs (and those leaders’ subsequent delegitimization) signal a crisis of representation and steps backward for democracy.

The political polarization generated by this ominous combination of factors is not only worsening ideological fractures in society; it is reducing the region’s ability to develop responses to an international situation that also entails a complex transition: the rivalry between the United States and China is not the only driver of this process.

  • These and other extraregional actors, including Russia, Turkey, Iran, and most recently India, are increasingly making Latin America and the Caribbean, despite the region’s apparent peripheral importance, into a battlefield of geopolitical and geo-economic confrontation that is complicating its struggle to maintain some degree of autonomy from external pressures and to diversify its foreign policies.
  • Three other related factors are aggravating this multi-faceted crisis. The corruption that has traditionally characterized the elites has spread throughout Latin American societies. Military forces are reappearing as political actors in a process that is threatening weakened democratic institutions and giving rise to diverse authoritarian models. Organized crime in its various incarnations – from trafficking in drugs to trafficking in humans – is expanding.

Within this context, to the challenge of leading during a pandemic are added several monumental tasks. Leaders will confront a recession and economic crisis that threatens to ravage the most vulnerable sectors and harm the whole of society. They will be confronted by demands to restore the resilience of democracy and its weakened institutions through strategies and public policies that reflect citizens’ needs.

  • More than ever before, the region’s leaders have an incentive to develop coordinated regional strategies that efficiently deal with these problems as well as other global challenges in ways that promote Latin American and Caribbean international integration with greater autonomy and diversification. Challenges in tough times demand complex, sophisticated social contracts and a deeper regional consensus – all difficult to achieve in a polarized and fragmented region, particularly while grappling with the combined and divisive impact of the pandemic and the economic crisis.

August 3, 2020

* Andrés Serbin is an international analyst and president of the Regional Coordinator of Economic and Social Research (CRIES), a network of more than 70 research centers, think tanks, NGOs, and other organizations focused on Latin America and the Caribbean. This article is adapted from one published in Clarín.

 

Latin American Integration: No New Ideas

By Carlos Malamud*

Heads of state stand for a picture at the 14th ALBA Summit held in Caracas in 2017

Heads of state at the 14th ALBA Summit held in Caracas in 2017/ EneasMx/ Wikimedia Commons

Several proposals claiming to promote regional integration in Latin America, particularly South America, have received attention in recent months, but proponents’ continued reliance on the same political-ideological alignments as always leaves little hope of bridging the deep splits in the region. Coming in the wake of completion of the EU-Mercosur trade agreement, after arduous and complicated negotiations, the proposals appeared to be good news. But that has not been the case.

  • The new push follows the creation of PROSUR by right-leaning governments in March and, more recently, efforts to relaunch UNASUR by left-leaning groups such as the Grupo de Puebla (Progresivamente) – each claiming commitment to unify the region behind their political visions. Two of the main advocates, Chilean President Sebastián Piñera on the right and Argentine Presidential Candidate Alberto Fernández on the left, have taken the easy path of convoking like-minded supporters while rejecting opponents.
  • These groups appear to have learned nothing from the first decade of the 21st century, when Venezuelan President Hugo Chávez pushed his Bolivarian project. The three efforts emblematic of the period – ALBA, CELAC, and UNASUR – all eventually failed. The rise of neoliberal governments in various countries since then has produced an even more complex situation. The new governments have continued emphasizing ideological conformity, reducing prospects for unity. Last December, a “Conservative Summit of the Americas” inspired by Brazilian President Jair Bolsonaro and his son met in Foz de Iguazú to rally the most extreme elements of the region’s right, conditioning participation on total agreement with its tenets.

There are exceptions.  The Pacific Alliance – a trade accord launched by Chile, Colombia, Peru, and Mexico eight years ago – has remained inclusive despite changes of government in each country. MERCOSUR, with its solid foundation and intense commercial exchanges, has also resisted ideological temptation in its way, although dismissive insults between President Bolsonaro and Argentine candidate Fernández do not bode well (even if both know that they need each other in the long run). But the fear is that extreme ideologies will, once again, trump national interests.

The intense electoral cycle of the past three years, and the pending elections in Argentina, Bolivia, and Uruguay, further complicate the situation. As the “turn to the right” has not turned out as predicted, the results of these three races this month will make regional relations even more unstable. The lack of a new vision for promoting Latin American regional integration is aggravated by the growing sense among both extremes of the political spectrum that they have to dig trenches.

  • The need for a new vision is obvious as the growing attacks on multilateralism and the escalation of the U.S.-China trade war are going to force practically all international actors to take sides. Latin America will suffer potentially grave consequences if its governments and political leaders don’t grasp that inclusion, not exclusion, is the only way to advance unity and integration. Acceptance of differences, dialogue, and negotiation are what’s needed now, as is a creative imagination that can accept reality as it is, with all its problems and imbalances. The question is whether the existing leaders will be able to overcome this sad state of affairs.

October 1, 2019

*Carlos Malamud is Senior Analyst for Latin America at the Elcano Royal Institute, and Professor of Latin American History at the Universidad Nacional de Educación a Distancia (UNED), Madrid. A version of this article originally was published in the Elcano Blog.

EU-MERCOSUR: Does Their New Association Agreement Mean Much?

By Thomas Andrew O’Keefe*

29/06/2019 Coletiva de Imprensa UE-Mercosul

Press conference about the trade agreement between the Mercosur and the EU / Palácio do Planalto / Creative Commons

After nearly two decades of intermittent negotiations, the European Union and the four core MERCOSUR nations (Argentina, Brazil, Paraguay, and Uruguay) have finally inked a trade agreement, but its real impact won’t be felt for years, if ever. When the negotiations began in the mid-1990s, the EU was the largest trading partner of the MERCOSUR countries, and the United States was number two. Today China is in first place, the European Union is second, and the U.S. is fourth, behind intra-Latin American trade (EU investors, however, continue to have the largest stock of foreign direct investment assets in the MERCOSUR region). When ratified, the EU-MERCOSUR Association Agreement, signed in Brussels on June 28, will exempt a little more than 90 percent of two-way trade from tariffs.

  • About 93 percent of MERCOSUR exports will eventually obtain duty-free access into the EU market, the bulk as soon as the agreement comes into effect. Agricultural commodities such as beef, chicken, corn, eggs, ethanol, honey, pork, rice, and sugar only get reduced duties, with many also subject to quotas. Another 100 MERCOSUR agricultural items are completely excluded from any type of preferential treatment.
  • Some 91 percent of European exports will get duty-free access to MERCOSUR, but gradually as tariffs are reduced over a 10-year period. The phase-out is over 15 years in the case of European automobiles, furniture, and shoes. MERCOSUR tariffs on the remaining 9 percent of primarily EU manufactured goods will remain in place permanently.
  • The agreement offers service providers from any signatory country full access to the markets of all the other signatory states.

MERCOSUR showed greater flexibility with the EU on agricultural subsidies than it had with the United States, a position that contributed to ultimate rejection of the Free Trade Area of the Americas (FTAA). Subsidies in the EU-MERCOSUR agreement are permitted if “necessary to achieve a public policy objective.” The MERCOSUR countries also capitulated on the use of anti-dumping tariffs on intra-hemisphere trade. The new accord, however, does authorize governments to impose a duty that is less than the margin of dumping if it adequately removes injury to the affected domestic industry. It also includes provisions for ensuring that sanitary and phytosanitary (SPS) measures as well as technical norms are not abused and become disguised impediments to free trade, although it permits enforcement of the European “precautionary principle” notion to restrict the importation of genetically modified food, for example, where the risks to health are not scientifically conclusive.

The agreement – now being “legally scrubbed” and translated into the EU’s 23 official languages – faces an elaborate, multi-year ratification process in the EU, where individual countries and the European Parliament must approve it, as well as each MERCOSUR government. Agricultural forces are already lining up in many European countries in opposition. In the meantime, the accord’s greatest impact is a signal by Brazilian President Bolsonaro and Argentine President Macri that they’re making progress on their stated objective to return MERCOSUR to its original trade focus – in contrast to their predecessors – and to claim an economic “victory” when growth in both countries remains stagnant.

  • Despite the flexibility MERCOSUR showed on agricultural subsidies and anti-dumping, its main sticking points with the United States in the FTAA, a free trade agreement with the United States seems remote as the Trump administration – in contrast to the Europeans – is unlikely to offer meaningful concessions based on the lesser developed status of the MERCOSUR countries. Neither will the Association Agreement with the EU reverse or even slow the region’s shift toward trade with China and the rest of Asia.

August 6, 2019

* Thomas Andrew O’Keefe is the President of New York City-based Mercosur Consulting Group, Ltd. and a lecturer at Stanford University. He is the author of Bush II, Obama, and the Decline of U.S. Hegemony in the Western Hemisphere.

South America: Regional Integration or Presidential Posturing?

By Stefano Palestini Céspedes*

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South American Presidents waving to the cameras in Santiago, Chile / Flickr / Creative Commons

Seven South American presidents’ launch of brand-new regional grouping called PROSUR last week was intended to give a boost to their personal agendas rather than take a serious step toward regional integration. The announcement was made on March 22 at a summit organized by Chilean President Piñera and attended by the presidents of Argentina, Brazil, Colombia, Ecuador, Peru, and Paraguay. The declared goal of the summit was to overcome what Piñera called the “paralysis” of the decade-old UNASUR.  Its final declaration emphasized the need “more than ever to work together to update and strengthen the South American countries’ process of integration” in the face of current and future challenges, including “inserting ourselves in an efficient way into the fourth industrial revolution and society based on knowledge and information.”

  • The creation of the Forum for the Progress of South America (PROSUR), however, delivered very little in terms of regional integration. The Santiago Declaration does not tackle the obstacles that hampered UNASUR, such as its decision-making procedure based on consensus. On the contrary, the declaration envisions PROSUR as a forum exclusively based on presidential diplomacy, in which all decisions by definition must be taken by consensus.
  • The Presidents said the new organization will focus on infrastructure, energy, health, defense, and dealing with natural disasters – the same areas where UNASUR had shown some progress. The declaration did not mention any particular ongoing crisis, such as Venezuela, but it made clear that it would work for full respect for democracy, constitutional order, and human rights. Again, this is not a departure from UNASUR, which also had a democracy clause adopted and ratified by the national parliaments.

The summit promised political gains for several participants. For President Piñera, it was an opportunity to project himself as a regional leader able to convene and coordinate South American heads of states, at a time that his domestic popularity is decreasing. Ecuadorean President Moreno – the only central-left president attending the summit – had yet a new opportunity to signal his willingness to coexist with pro-market governments in the region. For Brazilian President Bolsonaro, a well-known skeptic of South American integration, the summit was a platform to show a more palatable image closer to his liberal peers.

President Piñera and his guests blamed UNASUR’s bureaucracy for its lack of effectiveness, opting instead for a lean mechanism based on presidential diplomacy. Most long-time observers believe, however, that UNASUR’s effectiveness was undermined by its very weak organizational capacity, with a powerless Secretary General and personnel made up of low-ranking national diplomats instead of qualified international civil servants. Presidential diplomacy, unburdened by a bureaucracy of specialists who analyze problems and possible solutions, works well when Presidents get along in ideological terms, but precedent shows it is vulnerable to collapse when governments have divergent preferences or when states must agree on complex transnational issues such as migration, drug-trafficking, or deep economic integration.

  • PROSUR will work exclusively as a forum (not as a regional organization) and its decisions and initiatives will have to be executed and monitored by the national bureaucracies of the member states, which by definition look after national interests rather than regional interests. The Santiago Summit has demonstrated that when it comes to regional integration, leftist and right-wing heads of government look and act alike. No matter which ideology they claim, South American presidents fear collective institutions, cherish presidential diplomacy, and prefer to create new initiatives with pompous names from scratch, rather than make necessary reforms to existing ones. As Uruguayan President Vázquez – who did not attend the summit – put it, South America has a long history of integration initiatives that have not brought about integration. The region would be better served by reinforcing and overhauling existing mechanisms such as MERCOSUR, the Andean Community, or the Pacific Alliance, and try to make them convergent in any possible way, rather than adding yet another acronym.

March 29, 2019

* Stefano Palestini Céspedes is an Assistant Professor at the Institute of Political Science, Catholic University of Chile.

South America: Can it Navigate the Changes Ahead?

By Leslie Elliott Armijo*

Latin america

Latin America / Google Images / Creative Commons

Venezuela is the latest example of how Latin America, especially South America, has missed an opportunity to demonstrate the sort of hemispheric leadership it has long striven for – and instead has ceded that role to the United States and even Russia and China.  Although the United States, and the rest of the hemisphere more generally, have been slow to realize it, economic drivers are making the world more multipolar.  In a recent article by two colleagues and myself, we analyze international financial statistics covering 180 countries from 1995 to 2013 that reveal the slow relative decline of the United States as the reigning financial hegemon.  U.S. influence, although still formidable by some margin, is eroding.

  • The Trump Administration’s activities in the larger world are also undermining Washington’s influence. Policies in the WTO and other trade actions writ large – such as withdrawing from the Trans-Pacific Partnership (TPP) and threatening and implementing trade sanctions with little apparent logic – have brushed even allies back. Positions on the Paris climate accord, at the United Nations, and in the President’s relations with North Korean leader Kim Jung Un and Russian President Vladimir Putin have left many around the world increasingly reluctant to follow the U.S. lead.

In this increasingly multipolar world, Latin America, especially South America, is going to find itself not so much freed of U.S. influence – as intellectuals in the region have often stated their wishes – as exposed to new pressures.  The change will be manifest mostly in the economic arena.  New research by McKinsey Global Institute suggests that global value chains are ever more concentrated within multinational corporation networks, which tie major markets (essentially the United States, Western Europe, China, and Japan) to geographically contiguous countries.  This is arguably good for closer neighbors, such as Central America and the Caribbean in our hemisphere, but potentially harmful to those left out – including Sub-Saharan Africa, possibly the Mideast, and South America.

South America has diversified its trade – generally a good thing – among the United States, EU, and East Asia, with the latter having become the major trading partner for a number of countries. Chile and others have been pushing hard to build the Pacific Alliance, as well as to institutionalize the alliance’s relationship with Mercosur. This strategy will be put to the test if, as early trends indicate, the world regionalizes and South America comes under great pressure to refocus on its relations with the United States. To protect and advance their interests in the future, South American countries probably will try to find the right balance between embracing and rejecting the declining yet still dominant hegemon to the north and, as in the case of Venezuela, developing their own strategic vision, forging unity among themselves, and putting some muscle behind an agenda that prepares them for the future.

March 18, 2019

* Leslie Elliott Armijo is an associate professor at the School for International Studies, Simon Fraser University, Vancouver. She is the co-author, with Daniel C. Tirone (Louisiana State University) and Hyoung-kyu Chey (National Graduate Institute for Policy Studies, Tokyo), of The Monetary and Financial Powers of States: Theory, Dataset, and Observations on the Trajectory of American Dominance.

Latin America Takes on Big Pharma

By Thomas Andrew O’Keefe*

Colorful pills in capsule form and tablet form

Generic pills / Shutterstock / Creative Commons

For the past decade, Latin America has attempted to reduce the prices of high-cost medications through either joint negotiations, pooled procurement, or both, but so far with limited success.  The incentive for reducing prices is that all Latin American countries have national health care systems, and in some cases (such as Colombia and Uruguay) are legally obligated to provide their citizens with any required medication free of charge and regardless of cost.

  • In the bigger countries, such as Brazil and Mexico, the prices for certain pharmaceutical products and medical devices for public-sector purchase at the federal, state, and even municipal level are negotiated by a single governmental entity. Argentina, Chile, and Mexico also have mechanisms for pooled procurement of public-sector health-related purchases at all levels of government.  Given its huge internal market, Brazil also unilaterally caps prices on medications and threatens to issue compulsory licenses to extract concessions from pharmaceutical multinationals.

Latin American countries have also tried turning to sub-regional mechanisms to protect themselves from excessively high prices, albeit with meager results.

  • The Central American Integration System (SICA) has the most active regional mechanism to negotiate the prices of high-cost drugs and medical devices. The governments of Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama have authorized the Council of Central American Ministers of Health (COMISCA) to negotiate lower prices on their behalf.  Those medications and devices that obtain a reduction are then acquired by the public sector utilizing each government’s procurement procedures.  By negotiating as a bloc, the SICA countries report total savings of about US$60 million on dozens of products since the initiative began in 2010.
  • In late 2015, MERCOSUR launched a mechanism to negotiate prices for both the full and associate member states. Since those 12 countries coincided with UNASUR’s membership, that entity was given a supporting role to create a continental data bank of pharmaceutical prices paid by each member government that would be used to support the MERCOSUR negotiations.  That data bank proved to be ineffective, however, as not all countries submitted the required information and the methodologies for determining prices was inconsistent.  To date, MERCOSUR has only obtained price reductions for one HIV medication, manufactured by an Indian firm eager to establish a market presence in South America, and reportedly for an immunosuppressive drug used after organ transplants to lower the risk of rejection.  Reduction offers by Gilead for its Hepatitis C cure have, so far, been rejected by the MERCOSUR governments as inadequate.

MERCOSUR’s limited achievements appear to have encouraged individual countries to press on alone.  Colombia, while initially supporting the MERCOSUR initiative as an associate member, eventually established its own national mechanism to negotiate prices, and in July 2017 announced that it had obtained cost savings of up to 90 percent for three Hepatitis C treatments.  MERCOSUR’s sparse track record also helps to explain why Chile’s Minister of Health announced in October 2018 that his country, Argentina, Colombia, and Peru would utilize the Strategic Fund of the Pan American Health Organization (PAHO) to purchase 10 state-of-the art cancer treatments.  Because of PAHO’s annual bulk purchases, it is often able to obtain significant price reductions from pre-qualified manufacturers and suppliers that are then passed on to member governments.  Member states facing a public health emergency can also make purchases without cash in hand, as the Strategic Fund will extend a short-term loan at no interest.  In the future, the Latin American countries are likely to pragmatically utilize a range of options in trying to contain the rising costs of new medications that include both national and regional mechanisms as well as PAHO’s Strategic Fund.  The challenge will be to avoid Big Pharma “red lining” the region and excluding it from accessing the most innovative medical cures such as gene therapies that can fetch a million-dollar price tag per treatment.

February 19, 2019

* Thomas Andrew O’Keefe is president of New York City-based Mercosur Consulting Group, Ltd. and a lecturer at Stanford University.  He is the author of Bush II, Obama, and the Decline of U.S. Hegemony in the Western Hemisphere (New York: Routledge, 2018).