Sea Change in Spain

Latin America's economic growth and Europe's debt crisis have turned Ibero-American relations upside down.

With possible independence on the line, it is not surprising that Catalonia's regional election has garnered so much attention this week. But several days earlier, another critical Spanish storyline was thrown into sharp relief down south, in the Atlantic port of Cádiz during the latest Ibero-American summit.

As it turned out, Cádiz was a fitting site for the annual gathering of the heads of government and state of the Spanish- and Portuguese-speaking nations of Europe and the Americas. No city better epitomizes the nearly inverted relationship that has developed between Spain and Latin America in recent years. Cádiz was once one of Spain's most prosperous towns, and happily swallowed up treasures from the mines and plantations in its former colonies more than 200 years ago. Today, however, it has the highest level of joblessness in the country (over 36 percent) and has witnessed numerous protests as social unrest spreads across Spain. The "colonies," meanwhile, are now part of one of the world's fastest-growing and most confident regions.  

Back in 1991, when the first Ibero-American summit was held in Guadalajara, Mexico, Latin America was recovering from a string of economic crises during its "lost decade" -- while Spain and Portugal were finally coming into their own. Long the only authoritarian governments remaining in Western Europe, their democracies were taking root after a shaky start and their economies were gaining ground following entry into the European Union. The first summit was in anticipation of the 500th anniversary of Christopher Columbus's voyage to the New World, and was viewed in particular by Spain as a way to re-establish its presence in Latin America. In the 1990s, Spain fulfilled that aspiration during a period that was widely known as the "re-conquest" and characterized by heightened cultural interest and frenzied investment and acquisitions by Spanish firms in the Americas.

But on Nov. 16 and 17, when the group met for the 22nd time, the tables had turned dramatically. Despite some ominous signs in a few countries, Latin American presidents were largely upbeat about their region's steady economic performance (according to the Organization of Economic Cooperation and Development, the Latin American economy will grow by 3.2 percent this year and by a projected 4 percent in 2013). Their European counterparts, however, continued to be shaken by the sovereign debt crisis in the eurozone, which is facing its own "lost decade." 

The summit's Spanish hosts, Prime Minister Mariano Rajoy and King Juan Carlos I, were notably gloomy and appealed to their Latin American counterparts for support in their moment of distress. For decades, European and Spanish companies helped drive foreign investment in Latin America and helped raised Latin American concerns at the European level. Now, Spain and Portugal fully recognized Latin America's enhanced global status. (In fact, there were some calls in Cádiz for Latin American help in giving Europe greater access to Asian markets.) "Spain receives Latin American investment with open arms," Rajoy said in his opening address. Just a few years back -- let alone two decades ago -- such an entreaty would not have been taken seriously.

With profound crisis -- Spain's downturn has been stunning by any measure, with more than a quarter of the workforce unemployed and over 50 percent of 16- to 25-year-olds out of work -- has come a sense of humility in Madrid. Gone is the sense that Spain could teach Latin American countries how to adopt its successful political and economic model -- an attitude exemplified in particular by the administration of Spanish Prime Minister Felipe González (1982-1996).

In some respects, Latin America is already answering the appeal coming from Spain and Portugal. The region is a significant source of revenue for some of Spain's largest companies, including banking groups like Santander and technology firms such as Telefónica. Santander derives more than half of its profits from Latin America, the bulk from Brazil. And Latin America's energy and infrastructure sectors represent other fertile areas for Spanish investment. (Of course, these opportunities also involve risks, as Spain found out in April when Argentina nationalized Yacimientos Petrolíferos Fiscales (YPF), a division of the Spanish oil company Repsol.) Latin American companies, meanwhile, are increasingly pursuing investment opportunities throughout the world. In 2012, Latin American companies have purchased more than $12.7 billion in European assets. In Cádiz, both the Inter-American Development Bank and Corporación Andina de Fomento (CAF), the development bank of Latin America, pledged substantial support to medium-sized companies to export or invest in Europe.

In this stretch of bicentennial independence celebrations throughout Latin America, there have been numerous signs of a geopolitical role reversal. The region -- with the notable exception of Mexico in 2008, whose economy is closely tied to America's -- weathered the 2008 financial crisis remarkably well. Impressive macroeconomic management, innovative social policies, and huge, largely China-driven demand for high-priced commodities in many South American countries help account for the sound performance, which defied many expert predictions.

Perhaps nothing illustrates the striking reversal taking place in Ibero-American relations better than migration flows. The debt crisis has driven record numbers of Spaniards to emigrate, and many are choosing Latin America as their new home. Over the past four years, the Spanish population has risen 25 percent in Brazil, 54 percent in Peru, and 150 percent in Ecuador. Many of these migrants are Latin Americans who became Spanish citizens in the hopes of a better future and have returned home disappointed. Yet many others are young Spanish professionals unable to find work in their native country. Far more Spaniards are now coming to Latin America than vice versa.

When Christine Lagarde traveled to Mexico and Brazil a year ago, her message was unusual for the head of the International Monetary Fund (IMF), an institution that still arouses deep-seated resentment across the region for the austerity measures it prescribed over the decades. Lagarde sought to tap newfound wealth in those countries -- and specifically bilateral loans -- in response to the spreading debt crisis in Europe. Yet key officials such as Carlos Cozendey, the Brazilian finance ministry's international affairs secretary, made it clear that their willingness to contribute financially would be contingent on fundamental governance reforms at the IMF, including increased voting rights for developing nations. In the end, however, Brazil, along with the other BRICS, made the contributions that Lagarde had requested.

Brazil, the region's economic powerhouse and the world's sixth-largest economy, has and will continue to play a particularly critical role in defining the evolving relationship between Europe and Latin America. In Cádiz, Brazilian President Dilma Rousseff was hardly reticent in warning Spain and Portugal about the harsh consequences that severe austerity measures would bring -- and in touting her own government's vigorous effort to stimulate investment in infrastructure. Still, she acknowledged that Brazil is also greatly affected by the downturn in international markets, and this year the country's economy is projected to grow by merely 1.5 percent. Rousseff's warning reinforced Rajoy's own position as he seeks to ease drastic budget-deficit measures adopted by the European Union.

Indeed, while it may be tempting for Latin Americans to have a sense of schadenfreude in seeing their former colonial powers now suffering such a deep recession, they are acutely aware from firsthand experience how cyclical -- and contagious -- such crises are. The region is hardly immune from the dangers facing the global economy, be it the debt crisis in Europe (which accounts for 13 percent of Latin America's exports) or the economic slowdown in China (today China is the largest trading partner for Brazil, Chile, and Peru, and the second-largest for Argentina and Colombia). On a regional basis, the European Union remains Latin America's second-largest trading partner after the United States, with exports and imports that totaled more than $200 billion in 2011. Spain currently does $35 billion worth of trade with Latin America and in 2011 invested $18 billion in the region, mainly in Argentina, Brazil, Chile, and Mexico. Latin America, in other words, can hardly afford to view Europe's coming "lost decade" with indifference and complacency. As Rajoy noted in Cádiz, "If Latin America is an opportunity for Europe, we are also one for you." 

Still, the climate today is a far cry from what it was in 1991 in Guadalajara. The chief upshot of the Cádiz summit was the recognized need to "re-found" the Ibero-American relationship. The core idea that animated the annual gathering has been exhausted -- and it is still unclear what, if anything, will supplant it. The fraternal bonds and political mentorship on display in the 1990s have faded, giving way to heightened fragmentation.

For its part, Latin America is more diverse than ever, with Bolivarian countries rallying around Venezuelan President Hugo Chávez, other South American countries following Brazil's lead, and Mexico and Central American countries retaining deep ties to the United States. The leaders of these nations make economic decisions in accordance with hard-headed assessments of today's global economy, not some sentimental attachment to the mother country. None of these clusters needs Spain as a gateway to Europe or anywhere else in the world. The hard truth is that Latin America has outgrown Spain.

Mired in crisis for the foreseeable future, the Spanish model has lost its luster and the aura that was long associated with Felipe González's appealing leadership. Spain is not a G-20 member (unlike Argentina, Brazil, and Mexico) and a number of Latin American countries have increasing clout on the global stage. Growing political and economic dynamism is also manifest in the Latino population in the United States, which, at 52 million, exceeds Spain's population.

As if the two Iberian nations were not sufficiently dispirited by the reversal of fortunes, the next Ibero-American summit is scheduled to take place in booming Panama, where economic growth this year is expected to reach 10 percent -- the highest in the region.       

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Four More Years … in Exile

Can Republicans find their way out of the foreign-policy wilderness?

Now that the post-election blaming and bloodletting has mostly subsided, the Republican foreign-policy establishment is doing what it inevitably does in the wake of electoral disappointment -- starting to regroup.

This week, many of the leading lights of Republican foreign policy are gathering at the Newseum in Washington, D.C. for a forum titled, "The Price of Greatness: The Next Four Years of Foreign Policy." The conference is hosted by the Foreign Policy Initiative, a neoconservative think tank that is essentially the love child of the earlier Project for the New American Century, the conservative assemblage that, before it disappeared from the map, was a primary cheerleader for invading Iraq.

One need not be clairvoyant to guess the primary themes of the conference. Speakers like Senators John McCain and Jon Kyl will decry sequestration, the automatic budget cuts scheduled to go into effect on Jan. 2, 2012, as hobbling the U.S. military, but they will almost certainly fail to mention that military spending has doubled over the last decade. Likewise, conservative commentators Bill Kristol and Robert Kagan will wring their hands over what President Barack Obama's reelection means for the millions of people around the world waiting to be liberated by American troops. And featured speaker Bernard-Henri Lévy will decry U.S. inaction in Syria. (We know that Republicans are in regrouping mode when they invite French intellectuals as speakers rather than simply dismissing them "cheese-eating surrender monkeys.")

Despite the stirring rhetoric, most of the speakers will miss the real threat to Republican foreign-policy dominance: a very thin bench for 2016. To better understanding the looming internal problem facing Republicans, it is useful to turn back to the early days of Bill Clinton's administration -- though Republicans, by their nature, will hate being compared to anything Clintonian.

By almost any measure, 1993 and 1994 were ugly years for the Clinton foreign-policy team. The president and his advisers stumbled from crisis to crisis: American peacekeepers killed in the infamous Black Hawk Down incident in Somalia; a handful of thugs scaring off an American warship in Haiti; Bosnia's slow slide into chaos; the horror of the Rwandan genocide. Some of this reflected President Clinton's initial unease with the use of force, and some was the result of pure ineptitude.

But there was also a deeper and more systemic cause of those early fumbles. Democratic foreign-policy experts had been in the wilderness for a very long time. Indeed, the last foreign-policy experts to work in a Democratic administration had served way back in the Carter days. And a good number of Carter hands had a tough time finding work because they had been forever tarred by the Iranian hostage debacle. As a result, when Clinton took office, there were virtually no Democrats under the age of 35 who had occupied the hallways of the State Department, Pentagon, or USAID. Democratic foreign-policy graybeards were very gray beards, and there was little in the way of a clear plan for translating their criticism of the first Bush administration's foreign-policy into a superior alternative.

While experts and pundits love to talk about "grand strategy," the nuts and bolts of successful foreign policymaking are usually far more prosaic. Yes, you need sound policies and a good strategy, but you also need senior and junior staffers who understand the inter-agency process, enjoy good working relationships with career civil servants, and know whom they can trust and whom they can't in Congress and the bureaucracy. You need, in other words, people who know which levers to pull to get things done -- and Clinton didn't have them in the early years of his administration.

For Obama, the problem was less severe, since Democrats had only been in exile for eight years. He was able to staff his foreign-policy and defense teams with a mix of people who had served in the Clinton administration -- an administration whose record on foreign policy improved dramatically after 1994 -- and his own loyalists from the campaign. He also kept a few key of Bush's top people, such as Defense Secretary Bob Gates and FBI Director Robert Mueller. As a result, there was never a sense that Obama's foreign-policy team was adrift in the Oval Office, save for a few stories about the slow pace of nominations and confirmations early in the president's first term.

So, whither the Republican foreign-policy establishment on the heels of Romney's election loss? As Obama's experience demonstrates, eight years on the sidelines need not be debilitating. The older members of Bush's team will likely drift to the sidelines, ghostwriting the occasional op-ed and haunting the hallways of the Council on Foreign Relations and the Metropolitan Club. By and large, they will behave like elder statesmen.

But what is more problematic for Republicans is that the experienced, senior-level experts who will remain in the game for 2016 carry with them the stigma of Iraq and Afghanistan -- just as some of Carter's people were hobbled by Iran. The next Republican nominee will need distance both from George W. Bush's foreign policy and from Mitt Romney's campaign. Even Jeb Bush -- particularly Jeb Bush -- would have to look like he was taking a very different approach to foreign policy than his brother.

To be fair, disasters are often highly instructive for those willing to learn from them. Most successful businesspeople went through multiple failures before they got it right. Likewise, many of the best political professionals have suffered more than one long, losing election night. But even if they can sell the failures of Iraq and Afghanistan as lessons learned, the Republicans face a double whammy in 2016. Not only will they have been out of power for at least eight years, but Bush's cadre was notoriously bad at mastering the prosaic duties of managing an effective foreign policy. Many of Bush's appointees were disdainful of career public servants, allergic to actual expertise, and fond of grand visions built on shaky foundations. It all adds up to a pretty thin bench.

So while the speakers at the Newseum will put on a good show, don't hold your breath waiting for ideas that work in the real world.

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