Think Again

Think Again: Latin America

America's backyard is no longer an afterthought -- or Washington's to claim.

"There's no reason for Obama to be going to Latin America now."

On the contrary. Former U.S. President Richard Nixon once famously told the young Donald Rumsfeld that "people don't give one damn about Latin America now." (To be fair, his view of the region may have been colored by the experience of being pelted with rocks in Caracas while on a vice presidential goodwill tour in May, 1958.) Today, with popular revolutions upending the political order in the Middle East, an unprecedented natural disaster devastating Japan, and his own government hovering on the verge of shutdown, it may seem odd to many that U.S. President Barack Obama is choosing to embark on a five-day tour of a region often considered an afterthought in international politics.

But in fact, Obama's trip south is important for long-term U.S. interests, and long overdue. In today's economic order, where the G-20 is essentially a board of directors with only minority shareholders, the United States needs strong allies. Brazil is the ideal partner: large among the emerging countries, democratic, free of internal tensions, and without enemies. Cultivating that relationship is essential if Washington wants to continue to exercise leadership in the region. The recent turmoil in the Middle East also reminds us again of the fragility of energy security in the United States, and the importance of Latin America as a reliable source of renewable and nonrenewable energy.

Other powers have begun to take notice. China, for one, seems to have a strong strategic interest in a region where the U.S. is losing influence. China is Brazil and Chile's main trading partner, and in 2009 and 2010, the China Development Bank agreed to lend more than $35 billion to borrowers in Argentina, Bolivia, Brazil, Ecuador, and Venezuela (mostly under "loans-for-oil" arrangements). This is three times what the Inter-American Development Bank approves every year for the region as a whole.

U.S. political and business leaders, on the other hand, often seem reluctant to look to Latin America for opportunity, hampered as they are by outdated views of the region as dangerous, economically stagnant, and politically backward. With the U.S. losing market share to other countries eager to invest in and trade with Latin America, it is time to dispel some myths hanging over the region.

"Latin America is an economic failure."

Not anymore. Alan Greenspan devoted a chapter in his memoir to Latin America's proclivity for populist politics, which he defined as a "very special brand of short-term focus, which invariably creates very difficult long-term problems." Greenspan's observations were probably seasoned by the disastrous decade of the 1980s, during which the region suffered from chronic severe debt crises and hyperinflation. Today, Latin America is on a path of remarkable economic stability and growth thanks to macroeconomic policies that have brought low inflation and sustainable public finances.

The global recession was a small bump in the road for most of Latin America. Today, the region is growing at an average of 5 percent per year, inflation is in single digits and fiscal deficits are small. Public debt as a share of GDP is much lower than in the developed world. Chile and Peru are the two countries that stand out in terms of economic performance, but considerable success is also apparent in Brazil, Colombia, Mexico, Panama, and Uruguay. Rating agencies have granted all of them investment-grade status, which means that the risk of a default is extremely low. (Argentina and Venezuela are the two salient exceptions in the region.)

This is not just good luck, but a result of good policies. China's insatiable appetite for the region's natural resources has certainly helped, but the more important factor has been responsible macroeconomic management, a choice widely supported by voters in Latin America. Center-left governments -- like those of former President Luiz Inacio Lula da Silva and his successor Dilma Rouseff in Brazil, former President Michelle Bachelet in Chile, and former President Tabare Vasquez and President Jose Mujica in Uruguay -- have made macroeconomic stability a pillar of their economic strategies.

"Latin America is ideologically divided."

Not as much as you think. Many think that there is an ideological race in the region, reminiscent of Cold War tensions between East and West Germany. The popular perception is that one of the camps is led by Venezuela's president, Hugo Chávez, while the other camp is formed by the right-of-center governments of Colombia, Chile, and Peru.

In reality, most countries -- with the notable exceptions of Bolivia, Cuba, and Nicaragua -- have definitively rejected Chavez's "21st century socialism," which is based on heavy state intervention, forced nationalizations, and fiscal profligacy. The disastrous economic consequences in Venezuela are visible: Inflation hovers at around 30 percent and investment has been falling continuously since 2007. The economy contracted by 1.4 percent in 2010, in sharp contrast with the rapid growth of other countries in the region. Fewer and fewer countries are tempted by the populist rhetoric and the attacks on private enterprise.

A pragmatic Latin American consensus has emerged in contrast to the more ideologically driven Washington consensus. This new thinking combines market-friendly policies with a much more ambitious social agenda. While preserving macroeconomic stability, both left and right governments are aggressively combating poverty with programs like conditional cash transfers, first introduced by former President Ernesto Zedillo in Mexico, which have become a model for countries outside the region. Latin America's economic growth and effective public interventions have created an unprecedented expansion of the middle class. In a forthcoming Brookings publication with Homi Kharas and Camila Henao, we estimate that by 2020 10 percent of Latin America's population will enter the global middle class, bringing nearly 60 million individuals up to the same level of income as lower-middle-class citizens in such European countries as Portugal and Italy.

"Latin America is violent and dangerous."

Yes, but not unstable. Latin American countries have among the world's highest rates of crime, murder, and kidnapping. Pockets of abnormal levels of violence have emerged in countries such as Colombia -- and more recently, in Mexico, Central America, and some large cities such as Caracas. With 140,000 homicides in 2010, it is understandable how Latin America got this reputation. Each of the countries in Central America's "Northern Triangle" (Guatemala, Honduras, and El Salvador) had more murders in 2010 than the entire European Union combined.

Violence in Latin America is strongly related to poverty and inequality. When combined with the insatiable international appetite for the illegal drugs produced in the region, it's a noxious brew. As strongly argued by a number of prominent regional leaders -- including Brazil's former president, Fernando H. Cardoso, and Colombia's former president, Cesar Gaviria -- a strategy based on demand reduction, rather than supply, is the only way to reduce crime in Latin America.

Although some fear the Mexican drug violence could spill over into the southern United States, Latin America poses little to no threat to international peace or stability. The major global security concerns today are the proliferation of nuclear weapons and terrorism. No country in the region is in possession of nuclear weapons -- nor has expressed an interest in having them. Latin American countries, on the whole, do not have much history of engaging in cross-border wars. Despite the recent tensions on the Venezuela-Colombia border, it should be pointed out that Venezuela has never taken part in an international armed conflict.

Ethnic and religious conflicts are very uncommon in Latin America. Although the region has not been immune to  radical jihadist attacks -- the 1994 attack on a Jewish Community Center in Buenos Aires, for instance -- they have been rare. Terrorist attacks on the civilian population have been limited to a large extent to the FARC organization in Colombia, a tactic which contributed in large part to the organization's loss of popular support.

"Resurgent Latin America is a Threat to U.S. Interests."

Quite the opposite. Listen to some of the rhetoric in Washington and you would think that Latin America only impacts the U.S. economy by sucking away manufacturing jobs and flooding the country with illegal immigrants. The truth is that U.S. economic interests are more entwined with those of its southern neighbors than ever. This is an overwhelmingly positive development.

For instance, U.S. oil imports from Latin America are larger than those from the Middle East. Saudi Arabia, Iraq, and Kuwait combined make up only 20 percent of U.S. oil imports. Latin American countries -- specifically Venezuela, Mexico, Ecuador, Colombia, and Trinidad and Tobago -- account for one third of U.S imports. For the United States, assuring a stable oil supply from its Latin American neighbors should be no less important than preserving stability in the Middle East.

Also, the Latin American consumer market is by no means irrelevant for U.S. companies. The region's GDP is $4.2 trillion, roughly 84 percent of China's $5 trillion. With only 40 percent of China's population, Latin America's average per capita income is twice that of China's. Therefore, Latin American households are important consumers of U.S. manufactured goods and services. For example, in 2010, 20 percent of Citicorp's overall profits came from Latin America.

While the Middle East is currently forging its own path toward democracy and Asian nations are rapidly competing with the United States for global market share, the United States can partner with its democratic Latin American neighbors to set a strong path toward mutual economic prosperity.

Stronger hemispheric economic integration is the natural first step. But moving forward in this direction requires debunking the most pernicious myth. Many in Washington still believe that the United States is exporting jobs to Latin America. Rather, the opposite is true: The region buys goods and services that generate jobs in the United States. Mexico is the second-largest market for U.S. exports, Brazil the 8th, and Colombia the 20th -- even without the passage of the pending free-trade agreement. Their combined imports from the United States in 2010 exceeded $210 billion, which represent thousands of jobs in America, especially in the manufacturing sector. But today, Latin America has signed free-trade agreements with countries like Canada and South Korea that can supply similar goods. Signing the pending free-trade agreements with Panama and Colombia would be an effective way to preserve U.S. competitiveness in the region.

Economic success, social inclusion, and political assertiveness are the buzzwords of the new Latin America, a region that now exudes confidence and optimism. Long-term U.S. strategic interests will be much better served by a re-engagement with this often-ignored neighbor.

President Obama is exceptionally popular in the region, and can play a transformational role in hemispheric relations. But to do that he will need to begin by challenging Washington itself, slaying the demons and self-serving misconceptions that muddle a clear view of Latin America.


Think Again

Think Again: Arab Democracy

One of the world's foremost experts on democracy building debunks the myths surrounding the Arab world's new governments -- and wonders what sort of role the West should play.

"The Berlin Wall Has Fallen in the Arab World."

Yes and no. It's tempting to compare the astonishing wave of political upheaval in the Arab world to the equally dramatic wave of political change that swept Central and Eastern Europe in 1989. In the Middle East today, as in 1989, extraordinary numbers of ordinary people are courageously and for the most part nonviolently demanding a better future for themselves and their children. The wave broke just as suddenly and was almost entirely unpredicted by experts both inside and outside the region. And the process of cross-country contagion -- the political sparks jumping across borders almost instantaneously -- has also been strikingly reminiscent of Central and Eastern Europe in that fateful year.

Yet the 1989 analogy is misleading in at least two major ways. First, the communist governments of Central and Eastern Europe had been imposed from the outside and maintained in place by the Soviet Union's guarantee -- the very real threat of tanks arriving to put down any serious insurrection. When Soviet power began to crumble in the late 1980s, this guarantee turned paper thin and the regimes were suddenly deeply vulnerable to any hard push from inside.

The situation in the Arab world is very different. For all you hear about America's support for dictators, the Arab autocracies were, or are not, held in place by any external power framework. Rather, they survived these many decades largely by their own means -- in some cases thanks to a certain amount of monarchical legitimacy well watered with oil and in all cases by the heavy hand of deeply entrenched national military and police forces. True, the United States has supplied military and economic assistance in generous quantities to some of the governments and did save Kuwait's ruling Sabah family from Iraqi takeover in 1991. Generally, however, the U.S. role is far less invasive than that of the Soviets in Central and Eastern Europe -- just ask American diplomats if they feel like Saudi Arabia's independent-minded King Abdullah is a U.S. puppet.

What's more, though citizens in some Arab countries have given their governments a hard push, the underlying regimes themselves -- the interlocking systems of political patronage, security forces, and raw physical coercion that political scientists call the "deep state" -- are not giving up the ghost but are hunkering down and trying to hold on. Shedding presidents, as in Tunisia and Egypt, is a startling and significant development, but only partial regime collapse. The entrenched security establishments in those countries are bargaining with the forces of popular discontent, trying to hold on to at least some parts of their privileged role. If the protesters are able to stay mobilized and focus their demands, they may be able to force a step-by-step dismantling of the old order. Elsewhere in the region however, the changes so far are less fundamental.

Second, Middle East regimes are much more diverse than was the case in Central and Eastern Europe. The Arab world contains reformist monarchs, conservative monarchs, autocratic presidents, tribal states, failing states, oil-rich states, and water-poor states -- none of which much resemble the sagging bureaucratic communist regimes of Central and Eastern Europe in the late 1980s. Thus, even if the transition process in one or two Arab states does end up bearing some resemblance to what occurred in Central and Eastern Europe, what takes place elsewhere in the region is likely to differ from it fundamentally. Anyone trying to predict the political future of Libya or Yemen, for example, will not get very far by drawing comparisons to the Poland or Hungary of 20 years ago.


"Middle East Transitions Are More Like Sub-Saharan Africa."

Worth considering. Central and Eastern Europe in 1989 is not the only historical analogy political observers are proffering. Some are citing Iran in 1979; others Europe in 1848. A more telling analogy has not been receiving sufficient attention -- the wave of authoritarian collapse and democratic transition that swept through sub-Saharan Africa in the early 1990s. After more than two decades of stultifying strongman rule in sub-Saharan Africa following decolonization, broad-based but loosely organized popular protests spread across the continent, demanding economic and political reforms. Some autocrats, such as Mathieu Kerekou in Benin, fell relatively quickly. Others, like Daniel arap Moi in Kenya, hung on, promising political liberalization and then reconsolidating their positions. Western governments that had long indulged African dictators suddenly found religion on democracy there, threatening to withhold aid from countries whose leaders refused to hold elections. The number of electoral democracies grew rapidly from just three in 1989 to 18 in 1995, and a continent that most political analysts had assumed would indefinitely be autocratic was replete with democratic experiments by the end of the decade.

Of course, like all such analogies, the comparison to today's Middle East is far from exact. The oil-rich Arab states are much wealthier than any African states were in 1990. The significant presence of monarchical systems in the Arab world has no equivalent in sub-Saharan Africa -- as much as delusional "kings" like Swaziland's Mswati III would have it otherwise. The sociopolitical role of Islam in Arab societies is quite different from the role of Islam or other religions in many sub-Saharan African countries. Yet enough political and economic similarities exist to give the analogy as much or more utility than those of Central and Eastern Europe in 1989, Europe in the mid-19th century, and Iran facing Ayatollah Khomeini and his followers. It would behoove policymakers to quickly study up on the sub-Saharan African experience to understand how and why the different outcomes evident on the subcontinent -- shaky democratic success in some cases (Ghana and Benin), authoritarian reconsolidation in others (Cameroon and Togo), and civil war in still others (Democratic Republic of the Congo) -- took place.

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"Democracy's Long-Term Chances Are Slim."

Don't give up hope. During the heyday of democracy's global spread in the 1980s and 1990s, democracy enthusiasts tended not to pay much attention to the underlying social, economic, and historical conditions in countries attempting democratic transitions. Democracy appeared to be breaking out in the unlikeliest of places, whether Mongolia, Malawi, or Moldova. The burgeoning community of international democracy activists thought that as long as a critical mass of people within a country believed in and pushed for democracy, unfavorable underlying conditions could be overcome.

Two decades later, democracy enthusiasts are chastened. Democracy's "third wave" produced a very mixed set of outcomes around the world. Many once hopeful transitions, from Russia to Rwanda, have fallen badly short. Given these different results, it has become clear that underlying conditions do have a big impact on democratic success. Five are of special importance: 1) the level of economic development; 2) the degree of concentration of sources of national wealth; 3) the coherence and capability of the state; 4) the presence of identity-based divisions, such as along ethnic, religious, tribal, or clan lines; and 5) the amount of historical experience with political pluralism.

Seen in this light, the Arab world presents a daunting picture. Poverty is widespread; where it is not present, oil dominates. Sunni-Shiite divisions are serious in some countries; tribal tensions haunt others. In a few countries, like Libya, the coherence of basic state institutions has long been shockingly low. In much of the region, there is little historical experience with pluralism. A hard road ahead for democracy is almost certain.

Yet within the political and economic diversity of the Arab world lie some grounds for hope. Tunisia's population is well educated and a real middle class exists. Egypt's protests have shown the potential for cross-sectarian cooperation. Bahrain, Jordan, Kuwait, and Morocco have parliamentary institutions with significant experience in multiparty competition, however attenuated. Additionally, the five factors mentioned above are indicators of likelihood, not preconditions. Their absence only indicates a difficult path, not an impossible one. After all, India failed this five-part test almost completely when it became independent, but has made a good go of democracy. Returning to the analogy of sub-Saharan Africa in the 1990s, at least one-third of African states have made genuine democratic progress despite facing far more daunting underlying conditions.

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"Islamists Will Win Big in Free and Fair Elections."

Not necessarily. Many observers watching the events in the Arab world worry that expanding the political choices of Arab citizens will open the floodgates to a cascade of Islamist electoral landslides. They invoke the experience of Islamist victories in Algeria in 1991 and Palestine in 2006 as evidence for their concern.

This fear is overblown. Elections in which Islamists do well grab international attention, but do not represent the norm. Islamist parties have a long history of electoral participation in Muslim countries but usually only gain a small fraction of the vote. In their extensive study of Islamist political participation, published in the April 2010 Journal of Democracy, Charles Kurzman and Ijlal Naqvi find that most Islamist parties win less than 10 percent of the vote in the elections in which they participate.

It is true that after decades of autocracy, secular opposition parties in most Arab societies are weak and Islamists are sometimes the most organized alternative. Yet organization itself does not automatically guarantee electoral success. Given the powerful role of television and the Internet, electoral campaigns have often become as much about mass-media appeal as grassroots work. Especially in new democracies, charismatic candidates leading personalistic organizations and offering vague promises of change sometimes win out over better-organized groups (think President Susilo Bambang Yudhoyono of Indonesia). In addition, Islamists may inspire strong loyalty among their core supporters, but winning elections requires appealing to the moderate majority. The protests sweeping the Arab world have so far been notable for their lack of Islamist or sectarian sentiment, and nowhere among the countries in flux is there a charismatic religious leader such as Ayatollah Khomeini ready to seize power.

An Islamist victory somewhere in the Middle East can't be ruled out, but that does not mean we will see a replay of Iran circa 1979. Never in the Arab world have any Islamist election gains resulted in a theocracy, and established Islamist parties across the region have proved willing to work within multiparty systems. Moreover, newly elected Islamists would not have free rein to impose theocracy. Whoever is elected president in Tunisia or Egypt will face mobilized populations with little patience for fresh dictatorial methods as well as secular militaries likely to resist any theocratic impulses.


"Democracy Experts Know How to Help."

Yes, but humility is needed. With all the experience of attempted democratic transitions around the world over the past 25 years, is a clear "transition tool kit" now available to would-be Arab democrats? Western democracy promoters are indeed hurrying to organize seminars and conferences in the region to present lessons learned from other parts of the world. Former activists from Chile, the Philippines, Poland, South Africa, and other new democracies are in demand. Arab activists are eager to learn from the experience of others, and in many cases their hunger for knowledge is intense.

The traveling transition veterans tend to showcase a fairly common set of lessons: Opposition unity is crucial. Constitutional reform should be inclusive. Elections should not be hurried, but also not put off indefinitely. Banning large swaths of the former ruling elite from political life is a mistake. Putting a politically grasping military back in the box should be approached step by step, rather than in one big swoop. Given likely public disenchantment with the fruits of democracy, finding rapid ways to deliver tangible economic benefits is critical.

Such lessons are valid, but the notion of a workable tool kit is dubious. Every Arab country, be it Morocco, Bahrain, or Yemen, has such particular local sociopolitical conditions that supposedly universal lessons will be only suggestive at best. Nostrums about the importance of opposition unity, for example, often derive from countries such as in Chile, Poland, and South Africa, where political opposition movements enjoyed a much higher level of organization and concentration than what exists in the Arab states. Forging unity in a situation like Egypt or Tunisia where mass protest movements draw from dozens of smaller, often informal opposition groups and lack any strong leaders is a very different matter. A six-month wait for elections may be reasonable in some cases, but much too short in others. Moreover, these lessons are often useful more as descriptions of endpoints rather than processes. The hard part -- how to achieve them -- has to be figured out case by case.

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"Europe Has a Major Role to Play."

It could. Given its proximity to the Arab world, its welter of diplomatic ties, the weight of its commercial connections, its ample aid budgets, and much else, Europe should be a major player in the region's political evolution. During the last two decades, Europe set up gleaming cooperative frameworks to intensify economic and political ties with the region, including firmly stated principles of democracy and human rights. Yet the first of these, the so-called Barcelona Process, proved to be toothless on democracy and rights. Its successor, French President Nicolas Sarkozy's Union for the Mediterranean, was even weaker.

A whole series of obstacles have inhibited Europe's efforts to turn its value-based intentions into real support for Arab political reform. European leaders fear that political change might produce refugee flows heading north, disruption in oil supplies, and a rise in radical Islamist activity. Traditional French and British ties with nondemocratic Arab elites only add to the mix. The tendency of lowest-common-denominator policies by the consensus-oriented European Union has further undercut efforts to take democracy seriously.

The new fervor for democracy in the Middle East represents an enormous opportunity for Europe to regain credibility in this domain. The European Union played an invaluable role in helping influence the political direction of Central and Eastern Europe after 1989 thanks to the promise of membership for those states meeting certain political and economic standards. The same offer is clearly not possible now, but the core idea should be preserved. Numerous Arab societies badly need reference points and defined trajectories as they try to move away from decades of stagnant autocratic rule. If Europe could reinvigorate its tired and overused concept of neighborhood partnership by offering real incentives on trade, aid, and other fronts to Arab states that respect democratic principles and human rights, it could redeem its past passivity. Brussels appears to be starting to move in this direction -- but follow-through will be the rub.


"The United States Is Now on Democracy's Side."

Not so fast. In his most recent State of the Union address, U.S. President Barack Obama highlighted the success of protests in Tunisia, declaring that "the United States of America stands with the people of Tunisia and supports the democratic aspirations of all people." Then, shortly after Hosni Mubarak stepped down as president of Egypt, Obama pledged that the United States stands "ready to provide whatever assistance is necessary -- and asked for -- to pursue a credible transition to a democracy." On Libya, the United States has joined the many international calls for Muammar al-Qaddafi to leave. Has the United States finally turned the page on its long-standing support for autocratic stability in the Arab world? George W. Bush started to turn that page in 2003 by eloquently declaring that the United States was moving away from its old ways and taking the cause of Arab democracy seriously. But various unsettling events, especially Hamas's coming to power in Palestine in 2006, caused the Bush administration to let the page fall back to its old place.

It is as yet uncertain whether a fundamental change in U.S. policy will occur. The dream of Arab democracy appears to resonate with Obama, and numerous U.S. officials and aid practitioners are burning the candle at both ends to find ways to support the emerging democratic transitions. Yet enduring U.S. interests in the region continue to incline important parts of the Washington policy establishment to hope for stability more than democracy. Concerns over oil supplies undergird a continuing strong attachment to the Persian Gulf monarchies. The need for close cooperation on counterterrorism with many of the region's military and intelligence services fuels enduring ties. Washington's special relationship with Israel prompts fears of democratic openings that could result in populist governments that aggressively play the anti-Israel card.

Given the complex mix of U.S. interests and the probable variety of political outcomes in the region, U.S. policy is unlikely to coalesce around any unified line. A shift in rhetoric in favor of democracy will undoubtedly emerge, but policy on the ground will vary greatly from country to country, embodying inconsistencies that reflect clashing imperatives. Comparing U.S. policies with regard to democracy in the former Soviet Union is instructive: sanctions against and condemnations of the dictator in Belarus, accommodation and even praise for the strongman in Kazakhstan, strenuous efforts at constructive partnership with undemocratic Russia, active engagement in democracy support in Moldova, a live-and-let-live attitude toward autocratic Azerbaijan, and genuine concern over democratic backsliding in Ukraine. A similar salad bar of policy lines toward a changed Middle East is easy to imagine.

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