FTA Dreaming: Promises to Expand Free Trade in the Hemisphere

Photo by: Starley Shelton | Flickr | Creative Commons

Although Latin America has not been an issue in the U.S. presidential campaign, Republican presidential contender Mitt Romney has stated multiple times that he would promote hemispheric trade agreements.  In the second debate, he said, “I’m also going to dramatically expand trade in Latin America. … I want to add more free trade agreements so we’ll have more trade.”  Romney did not specify, however, with which partners he would conclude trade agreements.  (A request to the Romney campaign for more information has not been answered.)  President Barack Obama did not comment on Romney’s promise, suggesting the president’s lack of focus on the region or calculus that voters simply don’t care.  Under Obama, the United States ratified pacts with Colombia and Panama, negotiated during the Bush administration.  The U.S. already had FTAs with Central America and the Dominican Republic, Chile, Mexico, and Peru.

While that would seem to leave a number of large economies, nearly all of them are unlikely partners. The most important remaining economies – Brazil, Argentina, Venezuela, Uruguay, and Paraguay – are part of the Mercosur trading bloc.  Washington has refused to negotiate with them as a group, and the group prohibits members from signing bilateral accords.  Meanwhile, Venezuela, Bolivia, Nicaragua, Ecuador, Cuba, and several Caribbean nations have joined together specifically to counter U.S. proposals for free trade in the hemisphere.  The few remaining countries have tiny trading relations with the United States.

The idea of adding FTAs in Latin America looks quixotic.  Nevertheless, that is hardly an excuse for failing to improve trade relations short of comprehensive agreements.  There are important opportunities to deepen the United States’ most important trade relations with Canada and Mexico, as AU Professor Robert A. Pastor has argued.  Moreover, if the United States is willing to use the Andean Trade Preferences Act as a tool for development instead of a cudgel against Latin Americans it considers wayward, it could expand trade in ways that benefit all parties.  Likewise, trade problems have become outsized irritants in U.S. relations with Brazil and Argentina – to say nothing of the broader implications of U.S. “trade policy” with Cuba.  These problems have largely festered under Obama, and Romney’s promises of free trade agreements do not seem a serious proposal to correct them.

Arms, Allies, and Ahmadinejad: Lessons from the Cuban Missile Crisis

By Robert A. Pastor and Tom Long

Photo by: Bruce Tuten | Creative Commons | Flickr

On its 50th anniversary, the Cuban missile crisis continues to attract attention as a landmark event in U.S. foreign policy.  Unfortunately, the lessons that are often drawn from the crisis are the wrong ones – and they are predicated on a version of the history that is built on more fabrications than facts.  The lesson most often drawn from the crisis is that President John F. Kennedy’s firmness and resolve compelled Soviet Premier Nikita Khrushchev  to withdraw the missiles.  As Secretary of State Dean Rusk put it:  “We’re eyeball to eyeball, and I think the other fellow just blinked.”  Unlike Chamberlain at Munich, Kennedy confronted Khrushchev and prevailed.

However, the more complete story that we now know – forcefully buttressed by a host of excellent books released to commemorate this anniversary – is very different, and one of the reasons is that we have learned much more about the complicated role of Cuban President Fidel Castro, who initially opposed the Soviet proposal to place Missiles in Cuba, but then felt betrayed when Khruschev decided to withdraw them without consulting.  We also learned that the nuclear warheads and a substantial number of tactical nuclear weapons were already stationed in Cuba when the missiles were detected.  If Khrushchev had not withdrawn the missiles, and the U.S. had invaded, which it was about to do, these weapons would have been used, triggering a nuclear holocaust.   More recently, we learned that Castro tried to convince the Soviets to leave the tactical missiles, which the U.S. did not know about, after the denouement of the crisis, but fortunately, Khruschev rejected that proposal.

We cannot be absolutely certain as to why Khrushchev decided to withdraw the missiles, but all the available evidence suggests several factors.   First, Robert F. Kennedy had conveyed a complex proposal to Soviet Ambassador Dobrynin:  the U.S. would  not  invade Cuba if the Soviet Union withdrew the missiles.  More important, he said that the U.S. would withdraw its missiles from Turkey but only on condition that this information would not be made public.  Because of this deal, Kennedy was able to “spin” the event so that it looked like we won without giving up anything.  Robert Kennedy also said that he feared that the U.S. military might take matters into its own hands if the crises were not resolved soon.  At the same time, Fidel Castro sent a long message to Khrushchev, saying he expected an imminent invasion by the U.S. and recommending that the Soviet Union launch a first strike against the United States.  Coupled with the shoot-down of a U-2 over the island and a straying of another U-2  in Soviet Asia, these various factors led the Soviet leader to fear that both he and Kennedy were losing control of events, and thus, an immediate resolution of the crisis was essential.   That is why he transmitted his decision on radio.

Today’s great U.S. foreign policy fear is that a nuclear Iran will destabilize the Middle East.  Once again, the drama plays out in the middle of a U.S. electoral campaign, as did the Cuban crisis.  Once again, there are calls for threats and “red lines.”  An honest look at the events of 1962 yields useful lessons for today.  First, we should expect our leaders to have the courage to negotiate with adversaries to avoid conflict – and to stand up to domestic voices, including generals and advisors, pressing for war.  The second, more challenging lesson requires a U.S. president to step inside Nikita Khrushchev’s shoes.  The Soviet premier was able to stand up to an ally to avoid being dragged into a war with nuclear ramifications.  If Israel insists on a pre-emptive attack on Iran, will a U.S. president have the courage to restrain his ally, as Khrushchev had in restraining Fidel Castro?

Robert A. Pastor is a professor of International Relations at American University’s School of International Service and a faculty affiliate at the Center for Latin American and Latinos Studies. He has served as National Security Advisor for Latin America under President Jimmy Carter, and he was a Senior Fellow and director of programs on democracy, Latin America, and China at the Carter Center. Most recently, he is the author of The North American Idea: A Vision of a Continental Future.

Tom Long is a doctoral research fellow at the Center for Latin American and Latino Studies.

Honduras: What is U.S. policy?

The sustained surge in crime and violence in Honduras – including more than 60 politically motivated murders in the past year – is raising doubts about the viability of the government and its institutions.  The term “failed state” is often abused, but there’s no doubt that Honduras falls short of the rhetoric about its stability and democracy that the Obama Administration recited when arguing for the country’s readmission to the OAS after the 2009 coup that removed President Mel Zelaya.  Indeed, the coup set the country on a downward spiral from being a weak democracy to one struggling for basic credibility.  The U.N. Office on Drugs and Crime says Honduras has the world’s highest murder rate – 91.6 murders per 100,000 inhabitants in 2011.

Undersecretary of State María Otero has spent time and energy trying to establish a policy toward Honduras.  During a visit to Tegucigalpa last month, she signed an agreement with Foreign Minister Corrales that “sets the stage for results-oriented action towards our shared objective of a safe Honduras that respects the rule of law and human rights,” and she announced that the United States would provide an additional $1.8 million in aid to help counter gang activity in Honduras.  Despite her efforts, the State Department and the U.S. Embassy in Tegucigalpa have failed to go beyond ready-made programs and put in place a framework for a comprehensive policy.  Programs are not policy.  The Administration appears reluctant to admit that its Honduras policy, which has failed, needs an overhaul.

Multimillion-dollar programs will not succeed until they take into account that the Honduran “partners” upon which they depend are themselves at the core of the problem.  Three years after the coup, the Obama Administration still fails to see that its allies in the struggle against transnational and local gangs, as well as its efforts to build judicial institutions, are the same people who mocked the rule of law, overthrew the previous president, and re-politicized the military and police to serve their own purposes.  (The reasons for Washington’s unwillingness to help fund a “Commission for Security Reform” approved by the Honduran Congress are unclear, but this may be a factor.)  There are strong suspicions in many sectors of Honduran society that members of the country’s political-economic elite are the sponsors of the sicarios (hired gunmen) who have killed dozens of citizens whose offense was to demand an end to government impunity.  Given the challenge that the growing popularity of the country’s new political party, LIBRE, poses to traditional powerbrokers, informed observers expect violence to increase in the run-up to elections next year.  Absent public explanation of U.S. policy, it is fair to ask why Washington hasn’t seen these patterns – obvious to Hondurans – and why it hasn’t offered sustained support from the FBI and other U.S. law enforcement to investigate the assassinations and trace them back to the power bosses.  It is also fair to ask Assistant Secretary of State Brownfield and others who espouse the militarized approach to dealing with organized crime how this strategy, which has failed elsewhere, will succeed in Honduras.  Why hasn’t the Obama Administration supported the sort of U.N.-sanctioned investigative capacity that has proven effective with the International Commission Against Impunity in Guatemala?  Why has Washington not even pushed for meaningful implementation of the recommendations of the Truth and Reconciliation Commission released last year?  If Washington wants to make its rhetoric about Honduras into reality, it needs to do more than just to funnel funds into programs run by questionable partners.

Brazil’s Protest: If You Get QE3, We Get Tariffs

Photo by “SqueakyMarmot” | Flickr | Creative Commons

For two years Brazilian voices have complained that U.S. policies of near-zero interest rates and “quantitative easing” have been damaging its economy.  Lax monetary policies in the U.S. and Japan are blamed for the high valuation of the Brazilian real, which further suppresses Brazil’s  languishing manufacturing sector.  Tensions escalated following the September 2012 announcement of the U.S. Federal Reserve’s third round of quantitative easing.  Now the debate has spilled over into discussions about Brazilian restrictions on trade.  As Finance Minister Guido Mantega warns of a “currency exchange war,” Brazil is increasing tariffs on U.S. goods and foresees the imposition of taxes on inflows of foreign capital, which further inflate the Real.  Writing in Folha de São Paulo, Luiz Carlos Bresser-Pereira argues that Brazil is acting in self-defense.  The tariffs Brazil is contemplating are by his account not protectionist but simply an effort to compensate for the unfair advantage that the U.S. seeks to achieve through its monetary policy.

The tension is spreading beyond Brazil, as currency appreciation is portrayed as a drag on manufacturing in much of South America.   In an interview with CNN, Chilean President Sebastián Piñera criticized “QE3,” asserting that “printing money” would not solve U.S. economic woes.  So far, Andean countries are responding by purchasing dollars and cautiously reducing interest rates, but the Brazilians, in particular, present protectionist measures as counter-cyclical tools of their own, necessitated by American attempts to “drive down” the dollar.

The Brazilian and South American claims may be overdrawn somewhat; many experts believe that overvaluation is primarily a consequence of Chinese demand for South American commodities and the decision by most Latin American countries to maintain high interest rates in order to forestall inflation.  But U.S. policies meant to boost job growth are indeed having unintended consequences in the hemisphere.  There has been little thought in the United States of the external implications of Fed policy—beyond a belief that a reinvigorated U.S. economy would be good news for everyone.  Brazil has been the first, and most vocal, challenger of a stance that always frowns on tariffs while presenting monetary policy as a purely domestic matter.  It is a bit much for Brazilians to expect that U.S. monetary policy should be crafted with an eye to its impact on the region, particularly when conventional fiscal policy measures are thwarted by Congressional dysfunction, but Washington should not be surprised when efforts to tamp down its currency – not unlike Chinese policies that Washington condemns  – are seen abroad as aggressive threats to competition.

South America: Low Expectations for U.S. Election

Photo is in the public domain

Media in Colombia, Chile, and Peru are paying close attention to the U.S. presidential election, but only in Colombia do commentators seem to sense that November’s vote could have a direct impact on their country.  Colombian opinion-makers have not articulated specific concerns; their attention appears premised merely on the immensity of the relationship.  In Peru, commentators have noted concern about the positions advocated in the Republican primaries on a host of issues, such as immigration and the Cold War optic the GOP candidates espoused.  Chileans are following the horse race with curiosity but little mention of its potential implications.  In these countries, which are generally open to working with Washington, there is dissatisfaction with Obama but greater trepidation about a return to the foreign policies that characterized the Bush-Cheney era.  “Obama losing would not matter much,” wrote Antonio Caballero in Colombia’s Semana.  “But what would matter, a lot, is his Republican rival Mitt Romney winning.”  The columnist said it would be like re-electing Hoover after four years of Roosevelt.

Commentators fret that Romney’s swing right during the primaries proves he is unable to stand up to what they describe as conservative, white Tea Partiers on issues including gun control and taxes, but especially on immigration.  In Diario Correo, Peruvian Isaac Bigio wrote that Romney and Ryan would “launch an offensive against immigrants.”  On foreign policy, commentators see Obama’s record as mediocre.  In Colombia, the president gains points for passing the free trade agreement, but loses them for an overall lack of focus on the hemisphere.  But Romney’s rhetoric, punctuated by swipes at Russia and what he labeled a Chávez-Castro axis in the hemisphere, has created uneasy feelings.  “Romney advocates an aggressive discourse and hard hand in international relations,”writes Sergio Muñoz Bata of Bogota’s El Tiempo.  “If this sounds like a repetition of Bush’s policies, that is because those who dictate the foreign policy of the Republican candidate today are the same people who dictated Bush’s policies yesterday.”  Peruvian Santiago Pérez writes in Los Andes that Romney might “harden the U.S. position against ALBA…and try to intimidate (probably unsuccessfully) his unthreatening Bolivarian enemies.”  A return of the GOP could pose problems for the ongoing talks with the FARC and ELN, moderate Colombians fear.  Writing in Portafolio, Ricardo Ávila Pinto noted that Bogotá should be wary of “the U.S. reaction to any eventual success in the peace process with the FARC.”  Likewise, Chile’s Ernesto Ottone writes that Romney’s “uncultured simple-mindedness in foreign affairs responds to identity-based fanaticism with a warlike tone.”

A consistent theme is that the 2012 election lacks the hope of four years prior – hope for more effective U.S. partnership with the region, which Obama promised at the Summit of the Americas soon after his inauguration but has failed to deliver.  Many outlets reported former President Jimmy Carter’s comment that neither candidate was likely to pay much attention to the region.   While Colombian and Peruvian media reflect public concerns about immigration, the most prevalent fear is that a return to strident rhetoric would only heighten tensions between the U.S. and ALBA-aligned countries.  Colombia, Peru, and Chile don’t want to be stuck in the middle. There are no great expectations for improvement, but there is considerable worry about further decline.

U.S.-Honduras Counternarcotics Cooperation Stumbles

DEA Helicopter | by Andrew W. Sieber (Drewski2112) | Flickr | Creative Commons

Four months after the launch of Operación Anvil, a joint U.S.-Honduran counternarcotics effort, cooperation has stumbled.  Early in September, the United States suspended the sharing of intelligence – publicly characterized as mostly based on radar tracks – after the Honduran Air Force in July shot down two civilian aircraft suspected of trafficking drugs.  Citing the incident as a breach of a bilateral agreement that prohibits firing on civilian aircraft, State Department officials said they are reviewing procedures regarding cooperation.

The shootdowns were not the first controversial incident to raise doubts about the cooperation.  In May, a U.S.-Honduras counternarcotics operation in northeastern Honduras, during which at least one small boat was strafed, left four people dead and at least five injured.  While the raid targeted suspected drug traffickers in the vicinity, various reports have suggested that the victims were innocent locals or, at most, were spotters for traffickers.  Rather than undertake its own investigation, the U.S. Embassy in Honduras reportedly has deferred to a preliminary investigation by the Honduran authorities that showed no wrongdoing in the incident.  American and Honduran officials insist no American fired a weapon during the raid, but details of how the Honduran forces they were advising carried out the operation remain elusive.

The U.S. approach to counternarcotics in Honduras – like that in Colombia and Mexico – emphasizes military-style operations driven by U.S. intelligence tips.  In addition to sharing intelligence, the U.S. Drug Enforcement Administration and other U.S. entities provide training, equipment and on-site operational guidance to Honduran security units.  While the jury is out on whether this strategy has been worth the cost in human lives (60,000 in Mexico) and dollars (more than $7 billion in U.S. aid alone in Colombia), the case has not been made that it will work in a country plagued by weak institutions and corruption like Honduras.  Holding Honduran officials accountable and creating the vetted units upon which these military-style operations depend will be difficult in a small, desperately poor country in which the narco-dollar buys much more than U.S. aid channeled through officials in whom few have any confidence.  Efforts to create vetted units capable of operating securely (and without abuses of authority) have failed in the past because of unseen and unsolved links between the state officials and the narcos.  The Honduran people – still suffering from political violence born of the coup of June 2009 – have legitimate fear of a massive surge in drug violence.   The U.S. government, ever optimistic about the renewal of cooperation, has asked that Honduras put in place remedial measures to prevent future incidents.  President Lobo of Honduras has since replaced his Air Force commander, but the question remains whether Tegucigalpa can – and should – become a cornerstone of U.S. antidrug strategies.

Brazil: A Curious, but Very Distant Observer

This is the second of a series of entries examining how the U.S. presidential campaign is being viewed in different Latin American countries.

Photo: São Paulo by Cleber Quadros | Flickr | Creative Commons

The twists, turns, and daily gaffes of the U.S. presidential campaign elicit muted interest from Brazil’s opinion makers and usually land near the back of the newspaper.  A review of the Brazilian media indicates curiosity about the race but little fretting about its consequences.  As Republican candidate Mitt Romney has struggled, Brazilian commentators have started handicapping the U.S. election in President Obama’s favor.  The magazine Veja said Romney had nearly issued himself a “political death certificate” via recent mistakes, while O Globo judged the Republican to be down, but not completely out.

Romney’s struggles have not generated great joy, even though a recent poll showed that nine of 10 Brazilians, given the chance, would vote for Obama. Many Brazilians are frustrated about the Obama administration’s attacks on Brazilian trade policy, which they attribute to the coming election.  Public exchanges between U.S. and Brazilian trade officials have grown terse. Personal relations between Dilma and Obama appear chilly, with no conference planned on the sidelines of the UN General Assembly this week.  Romney’s foreign policy positions, on the other hand, draw criticism.  Mocking Romney’s rightward drift, Professor Demetro Magnoli wrote in Estado do São Paulo that the former governor is “the most dangerous man in the world” for his threats to unleash a trade war with China and a real war with Iran.  Nonetheless, Magnoli and others in the Brazilian press seem skeptical that campaign rhetoric will be reflected in foreign policy.

While the U.S. campaign gives Brazilians little reason for either excitement or concern, one implication they may see is that Brazil’s regional stature will continue to ascend regardless of who wins.  Romney’s campaign platform for Latin America plays up threats from “Bolivarians,” criminals and drug cartels, and Hezbollah.  Moreover, his promised solution – a “Reagan Economic Zone” – seems incongruous with the late president’s image in Brazil and much of Latin America.  Obama, on the other hand, has a personal background and restrained tone in foreign affairs that makes him more popular with the Brazilian public, but he has not taken advantage of that to improve relations or to address irritants like trade or onerous visa requirements, nor to improve Washington’s image in Latin America.  Whichever administration begins in 2013 will find a Brazil that is curious, but hardly waiting on Washington for answers.

Panamanian President Martinelli Examined

Photo by: Congreso de la Republic del Perú via http://www.flickr.com/photos/congresoperu/4923731107/

 

Wall Street Journal columnist Mary Anastasia O’Grady on June 20 published a commentary about right-leaning Panamanian President Ricardo Martinelli that had a tone and edge that she usually reserves for leaders she suspects of being communists, populists or nationalists.  Entitled Panama’s Democracy Goes South, Ms. O’Grady documented “the warnings from a growing chorus of Panamanians that [he] is moving the country toward authoritarianism.”

Martinelli – blessed by the Obama Administration last year with a Free Trade Agreement in part based on an evaluation of Panama’s democratic institutions – is “tearing down institutions,” stacking the Supreme Court, and apparently steering government lucre to build a parliamentary coalition that made the national assembly into a rubberstamp of his agenda.  O’Grady points out that this amounts to “the erosion of Panamanian pluralism” and compares him with Venezuelan President Chávez.

This portrayal of Martinelli’s leadership is not unique – it is well documented – but official Washington’s embrace of it would be.  The authoritarian tendencies of some ALBA presidents have been well publicized and, at times, exaggerated, but rightwingers with similar tendencies often get a pass.  In this context, such comments in the Wall Street Journal are significant.  For now, no regional institution and no major democracy, including the United States, has threatened sanctions against Martinelli.  Last week, the State Department announced that some assistance to Nicaragua will be suspended because of poor progress toward achieving transparency in government budgets – precisely one of the areas where Panama has experienced egregious backsliding.  Sanctions against Martinelli, however, seem remote.  Latin American leaders at times have bridled at the double-standards of external criticism more than at the sanctions themselves.  O’Grady’s commentary challenges the State Department to send a message to the region that its “democracy promotion” agenda applies to conservatives as well as those it often categorizes as on the Left.