Argument

The Debate the GOP Didn't Have in Florida

Instead of repeating tired applause lines about Fidel Castro, here are the vital Latin American issues the Republican candidates should be talking about.

One can be forgiven for assuming that a primary election in Florida -- a state with a huge Latino population, often touted as the gateway to Latin America -- would offer the best time and place to have a serious debate about how the United States should deal with its closest neighbors, its proverbial "backyard." But that would be ignoring past experience and today's political realities.

Indeed, when it comes to Latin American policy it is generally wise to keep expectations in check. The Republican candidates have eschewed the tough questions and preferred to fantasize about space centers rather than take a hard look at the countries nearest to Miami's shores. To the extent Latin America was treated at all, the discussion has been dominated by phantom threats and tired bromides.

There is, of course, a real threat ravaging a number of countries close to Florida -- and whose citizens make up a substantial share of the growing Latino population in the United States. Drug-fueled criminal violence has, according to official statistics, claimed close to 48,000 Mexican lives since 2006, when Felipe Calderón came to office. Mexico, which is holding elections in five months is, as George W. Bush once rightly said, the United States' "most important bilateral relationship."

What happens in Mexico is fundamental to U.S. interests. Yet not a serious word was uttered among the candidates about whether the current U.S. policy, reflected in an aid package known as the Merida Initiative, adequately addresses the problem -- or whether different approaches or ideas to the drug war should be considered.

The situation in the "northern triangle" countries of Guatemala, Honduras, and El Salvador is even more alarming. Central American governments are overwhelmed and outmatched, unable to cope with a growing crime wave. A recent report in the Miami Herald about Honduras was particularly chilling. Honduras now has the world's highest homicide rate (82.1 per 100,000 residents). Nearly 7,000 homicides were recorded in 2011, a 250 percent increase in half a dozen years. Organized crime pervades the country's police forces.

How should the United States respond to such rampant lawlessness? Clearly the current Honduran government is overwhelmed and doesn't have sufficient resources or capacity. To be sure, in the Florida debate Rick Santorum was critical of Barack Obama's mistakes in responding to the June 2009 political crisis.  But how should the president deal with today's reality? And how does this grave situation compare with other foreign-policy priorities? Plausible scenarios are dire, but the United States has a fundamental interest in safeguarding fragile democracies in a neighboring region. (Obama also avoided this issue in his recent State of the Union address.)

Drug policy is a key dimension of the current crisis. Drugs -- in Central America, chiefly cocaine -- fuel much of the violence, yet are apparently an issue unworthy of discussion in a U.S. presidential race (with the exception of Ron Paul, who has no chance of being nominated). True, the inflated rhetoric associated with the "war on drugs" has notably abated. U.S. politicians no longer say, as George H. W. Bush did in 1989, that anti-drug efforts "will require the bravery and sacrifice that Americans have shown before and must again." But policies persist that, despite an investment of billions of dollars over the last four decades, have yielded few positive results. Much to the chagrin of most Latin Americans, there is no appetite in Washington to entertain alternative approaches.

A serious debate on the drug war would feature the candidates' responses to the recommendations made in a 2009 commission report headed by three respected Latin American ex-presidents -- Fernando Henrique Cardoso of Brazil, Ernesto Zedillo of Mexico, and César Gaviria of Colombia. The report underlines the risks posed by the growing drug problem to democracy in the region, calls for a wide-ranging policy review, and urges specific measures, such as the legalization of marijuana. Colombia's current president, Juan Manuel Santos, has also reiterated appeals for a global debate on drug policy, beginning with consumer countries such the United States. Far more Latin Americans have died in the ill-conceived drug war over the years than during the Arab uprisings. But few in Washington appear to care about the former.

The Republican candidates did, of course, talk about immigration, another major concern of most Latin Americans. But the debate was far from edifying, and there was no sense that for Latin Americans immigration is also a foreign-policy issue. Building a wall on the U.S.-Mexico border, for example, is seen as an affront to Latin Americans, and makes cooperation on other issues more problematic (of course, Democrats also view immigration as an entirely domestic issue). It will be difficult to build more constructive and deeper relationships with many countries in the region unless the broken U.S. immigration system -- reflected in millions of productive and hard-working Latinos living in fear of deportation -- is fixed.

New York Mayor Michael Bloomberg has rightly linked immigration reform to the country's economic well-being, and in a number of interviews former Secretary of State Condoleezza Rice has stressed that comprehensive reform is essential. "Some of the harsher things said about immigration are both shortsighted and, ultimately, in the long-term, will undo one of the great strengths of the United States," she said recently.  Are any of the Republican candidates listening?

What about policies that seek to take fuller advantage of economic opportunities in Latin America? Virtually nothing has been said about this in Florida, a state whose economy is increasingly connected to the region.  A number of Latin American countries boast burgeoning economies and are looking for new markets. The Chinese (whose trade with Latin America surged by some 160 percent from 2006 to 2010) and other key global players are keenly interested in the region for commercial benefits. Has the U.S. response to increased competition been sufficiently vigorous? Are there other policies worth pursuing in Latin America that can help create more jobs in the United States? Is a review of protectionist agricultural policies for products like orange juice and sugar, which seal off avenues for trade with the region, warranted?

What about energy opportunities? As Daniel Yergin has persuasively argued in his latest book, the Western Hemisphere will be absolutely crucial to secure non-renewable energy supplies, particularly in light of the pre-salt discoveries off the coast of Brazil, the region's economic and political powerhouse and today the world's sixth largest economy. Brazil has also been in forefront in the production of sugarcane ethanol, which has important implications for the United States. Yet serious discussions about energy have been absent in the Florida debates.

There are reasonably good prospects for oil production off the coast of Cuba as well, yet not surprisingly, the debate in Florida boiled down to a contest about who can sound tougher on Fidel Castro and his creaking communist dictatorship. (Only Paul acknowledged that the long-time embargo has been counterproductive and has only helped the Castro brothers tighten their grip.)

To be sure, there are ample reasons to debate Cuba, along with other fiery issues like Venezuela and Iran's growing role in the region. But such debates should be anchored in facts and realities, and put in perspective. Across Latin America, there is a broad perception that Cuba occupies a disproportionate place on the U.S. policy agenda, the product of pressures from Florida's Cuban-American community. Washington is viewed as similarly obsessed with Venezuela's Hugo Chávez, who may be a nuisance and not a terribly constructive force in his country but whose regional influence has markedly declined in the past several years.

Latin Americans believe Iran's moves in the region should be closely watched, but that, given their hard-earned democratic peace and prosperity, they do not offer fertile terrain for nefarious, destabilizing acts. They further believe that Washington should be careful not to exaggerate Iran's influence in the region, as Santorum did when he said, "Iran is organizing a Latin terror network." Within an increasingly self-confident and assertive Latin America, Newt Gingrich's reference in Florida to Iran's "overt violation" of the (long-defunct) Monroe Doctrine must have sounded especially outlandish and insulting.

The Republican candidates could have usefully addressed whether they believe the United States might be hampered in conducting its Latin American policy when ambassadorial appointments are vacant in six countries (Bolivia, Ecuador, El Salvador, Nicaragua, Uruguay, and Venezuela) and Roberta Jacobson, the respected nominee for assistant secretary for Western Hemisphere Affairs, has not been confirmed for just over four months. Do the candidates believe it is important to have someone at the State Department in charge of the bureau, with full authority, at this moment in U.S.-Latin American relations? If not, why not?

Maybe I'm a hopeless dreamer. In the current political climate, is it even possible to have a serious debate about what the United States should be doing in Latin America? Does anyone care? It surely didn't happen in Florida, but perhaps it will in other primary contests, or in the general campaign. Like Newt Gingrich, we all have the right to fantasize.

PAUL J. RICHARDS/AFP/Getty Images

Argument

On a Knife's Edge

The global economy is balanced precariously between total collapse and salvation. Here are four tipping points toward disaster and four things that could get it back on track.

The year 2012 is Europe's moment of truth. If their dithering continues, European politicians will soon lose control of the continent's economic and financial future. After all the excitement of 2011, it is also a make-or-break year for some Middle Eastern countries in the midst of tricky political transitions. Even the United States is being shaken out of its social slumber as concerns mount about income inequality and, more generally, the fairness of the "system."

All this speaks to an increasingly bimodal outlook for the world economy in the years ahead. At one end, timely and proactive policy measures can help with the healing and put the globe back on the path toward higher growth, job creation, and better social justice. At the other, political dysfunction and financial deleveraging could lead to economic fragmentation, higher unemployment, trade wars, and social unrest.

In an attempt to shed light on the key issues in play, what follows is an attempt to identify four factors that could wreck the global economy in the next few years, and four factors that could propel it to greater stability and prosperity. Let's hope our leaders choose wisely.

THE WORST CASE

European economic and financial fragmentation: As of today, the biggest risk for the global economy this year is the disorderly collapse of the eurozone. It would bring economic and financial activity to a standstill across the continent, cause widespread corporate bankruptcies and bank runs, and destroy millions of jobs. Other countries, be they advanced or emerging, would be contaminated by the collapse in global trade, the curtailment of credit, and the spike risk aversion that would lead investors to rush into cash. A complete eurozone collapse would be both chaotic and an unmitigated disaster.

Disruptions in the Middle East: As the New York Times' Thomas Friedman brilliantly pointed out in a recent column, there are two types of destabilized countries: those that implode when highly stressed, and those that explode, affecting entire regions. Iran and Syria are of the latter type, and both are near boiling point due to internal and external developments. The greater the instability in these two countries, the higher the risk of regional contamination and, accordingly, worrisome global repercussions. This could include surging oil prices, leading to an ugly global stagflation.

Central bank exhaustion: Unconventional measures by central banks have, up to now, played a critical role in avoiding debt deflation and economic recessions in advanced economies. In the process, the banks have ballooned their balance sheets to previously unthinkable levels (from 20 percent of GDP for Britain and the United States to 30 percent for the European Central Bank). No one knows with any degree of confidence how far these balance sheets can expand safely, nor is there sufficient clarity on the collateral damage and unintended consequences. What is clear is that we are in unchartered waters and, given that they are the only agencies that have stepped up to the policy plate, the world can ill afford a loss of central bank credibility and effectiveness.

Social unrest: Enabled by social media technologies that facilitate broad-based coordination, the world has witnessed an astonishing outburst of grassroots social movements that are pressing for greater social justice -- from the Arab Spring to the Indignados in Spain, the Occupy movements in the United States, Israel's protesters, and anti-austerity riots in Greece and Italy. Having come together on the basis of legitimate grievances, these movements now face the challenge of pivoting from complaints about the past to helping to build a better future. The longer it takes the pivot, the higher the probability of frustration and of the protests turning violent -- and governments reacting inappropriately.

THE BEST CASE

"Refounding" Europe: France and Germany have embarked on an effort to strengthen the underpinnings of a restructured and reformed eurozone -- what French President Nicolas Sarkozy has labeled a "refounding." So far, this effort has been half-hearted, trying to meet too many objectives with too few instruments. Both Europe and the world would benefit from a more focused effort to enhance the core of Europe through greater fiscal and political integration and countering the fragility of banks. The likely outcome -- namely, a smaller but more robust eurozone focused more on the Germanys and Netherlands of the region as opposed to a Greece or Portugal -- would remove a major uncertainty that holds back investments and job creation.

America's Sputnik moment: The United States remains the global economy's best locomotive for growth. But its vibrancy is threatened by unprecedented political squabbling that undermines any attempt to lift the impediments to growth. What America needs is reminiscent of what followed the Soviet Union's successful launch of Sputnik in 1957 -- the convergence of American society around a common vision and purpose. A 2012 economic Sputnik moment would lift structural obstacles to growth (including in housing, public finance, and credit), unleash the considerable dry financial powder currently on the sideline, and empower the entrepreneurship that is unquestionably in place; and the post-Sputnik efforts would revolve around improving education, infrastructure, innovation, and other enablers of long-term growth.

Political healing and leadership: It is not due to complicated technical difficulties that many of the world's economic problems persist and deepen. In most cases, today's malaise is a reflection of political dysfunction and ineffective leadership, both of which pre-empt any meaningful effort to take the difficult yet necessary decisions. Witness how the U.S. Congress has torpedoed President Barack Obama's job initiative. As a result, the credibility of the system itself suffers. Fortunately, several key countries, including the United States, are holding elections this year, giving citizens an opportunity to send a message to their elected representatives. The greater the clarity and urgency of that message, the higher the probability that bickering politicians can overcome real and perceived legacies to unite in doing the right thing for current and future generations of citizens.

Unleashing the emerging consumer: Emerging economies, China in particular, are in a very different place today than Europe and the United States. With a savings rate that has consistently been among the highest in the world, their consumers have the wallet but not the will to spend. Their behavior is a complex reflection both of self-insurance against the uncertain public provision of social services and of government policies that favor production at the cost of consumption. By moving on the latter, for instance accelerating the liberalization of the exchange rate system and tweaking the balance of taxes and subsidies, emerging economies can have a material impact on global growth and trade.

***
 

The world economy faces an unsettling outlook for the next few years. It can either break out of its current malaise and deliver economic prosperity, jobs, and greater social fairness; or, instead, it can slip deeper into unemployment, inequality, financial instability, and trade wars. Neither is preordained at this stage as leaders still have an important ability to influence outcomes to the better. But, as Europe demonstrates, the longer they dither and bicker, the higher the risk that policies will lose both effectiveness and credibility.

Pablo Blazquez Dominguez/Getty Images