Photo Jonathan Blair

Tuesday, July 26, 2011

Brazil and the dis-integration of Latin America

A noisy regionalist rhetoric dominates Brazil's foreign policy discourse: Brazil is a regional leader, Brazil's foreign policy priority is Latin America, Mercosur remains a central tenet of its foreign policy, etc. etc.

The Mercosur part of this argument has been damaged in recent years by repeated and never-ending disputes, leading prominent commentators like Marcos Janks to call the customs union "a suitcase without a handle," and PSDB presidential candidate Jose Serra a "joke" and a "hurdle" for Brazil. The rest of the equation, however, is largely taken for granted in discussions of Brazilian foreign policy.

Rubens Barbosa, a very prominent retired diplomat and former Brazilian ambassador to London, basically sinks the rest of the argument by pointing out that Brazil's share of foreign investments in the region has fallen from 5.9% in 2006 to 1.7% in 2010. Now, reflect on those numbers: Brazil is currently the world's seventh largest economy, with about 6% of global GDP and Latin America is "its" region. Yet, it basically does not figure among investors into it, leaving the place to "foreigners" like the US, Canada, and EU--particularly Spain--and, increasingly, China. Trade numbers tell the same story: while "up" in absolute terms, the region's share of Brazil's total exports and imports has been declining in recent years.

People have been wondering for a while why Brazil's many regional endeavors had been so devoid of structure, why the Rio Group, UNASUR and especially Mercosur had never really evolved significant institutional capabilities. Obviously, Brazil was not alone in all those, and most Latin American countries are reluctant to tie themselves into a constraining framework with so big a partner as Brazil. But, as Germany and to a lesser extent France have shown with Europe, asymmetry can be compensated in many ways, through institutions that constrain the big fish or through compensation funds. Yet Brazil has never seriously tried those.

The reason looks straighforward: there is simply not enough at stake in the region for Brazil to invest significant amounts of political and economic capital in building serious regional institutions. With so few real ties to the region, political leaders are at a loss to sell serious engagement to the broader public or even the national Congress. Without surprise, they thus fall back to making the right noises in ever multiplying summits and meetings, none of which contributes much to the institutionalization of regional affairs. It is the new inflation: ever-growing mountains of paper on ever-shrinking substance.

The investment numbers reinforce the impression that Latin America is dis-integrating. In the global division of labour, most countries of the region are becoming--again--exporters of primary goods, either minerals, energy or agricultural products, and importers of industrialized ones. Asia, and China in particular, is already the main destination of primary goods and the main source of industrial ones, while Latin neighbours appear increasingly like competitors on global markets. The structural basis of integration is breaking down.

One can argue about how good or bad these developments are, but it is becoming harder to deny that such a breakdown is taking place, however frequent regional summits may be and however thick the Latin solidarity rhetoric that accompany them.

Friday, July 22, 2011

Killing drug lords: What it does do, and what it doesn't

Decapitation is popular among War on Drugs advocates. You cut the head, and perhaps the neck or even part of a shoulder while you are at it, and the "cartel" is done with as a national security threat.

Former Drug Enforcement Administration Administrator Robert Bonner has argued in Foreign Affairs that this was a key lesson Mexico has to learn from Colombia's success: "Removing the kingpin and his potential successors is the death knell for such organizations." It is quite clear that Mexico has taken note.

Now, note the proviso Bonner introduces in his analysis: "In Colombia, the objective was to dismantle and destroy the Cali and Medellín cartels--not to prevent drugs from being smuggled into the United States or to end their consumption. Indeed, there are still drug traffickers in Colombia, and cocaine is still produced there, but compared with the old cartels, the trafficking groups there today are smaller, more fragmented, and far less powerful--and, most important, they no longer pose a threat to Colombian national security. From a law enforcement perspective, the problem in Colombia today is manageable. The United States must accept that the goal in Mexico is similar: the destruction of the large Mexican cartels, nothing more and nothing less."

Here is the key: national security is the goal, NOT drug trafficking or even public security. This is also how Columbian President Santos put it when he visited Mexico in August: a matter of national security, that has been essentially dealt with as the country now only confronts "minicartels." Violence remains a problem, however, as Colombia's "manageable" public security problem today means 32 murders per 100,000 people, vs Mexico's 18. As I pointed out recently, Eduardo Guerrero Gutierrez has shown how the fragmentation of drug trafficking organizations is in fact a major driver of violence. As to drug trafficking, a recent analysis from the US Customs and Border Protection shows that the killing of drug lords has no bearing whatsoever on the amount of drugs that crosses the border.

So, once again, the beauty of decapitation is in the eye of the beholder and depends on what she wants: national security for the US, public security in Latin America, or effective decrease in drug smuggling. And the problem is: you have to choose.

Thursday, July 21, 2011

Crunch time for the OAS?

On July 20, the House Foreign Affairs Committee has voted to suspend the United States' contribution to the OAS, with Republican members accusing the organization of being anti-US, supporting Hugo Chavez and the Castros' Cuba. If that decision holds, the OAS would lose $44.2 million--or more than half of its $85.3 million budget--and its very existence would be at stake.

Now, if the OAS were to disappear, what would be lost?

The first answer that comes to my mind is "little." After all, $85 million is not much money and the OAS has never been known for its efficient use of resources. With the re-democratization of the region, other mechanisms of cooperation have emerged that have played prominent roles in the international management of inter-state and domestic political tensions in the region, particularly in South America. Moreover, once you consider Canada's $10 million grant, the fact that the other members paid on average about $900,000 shows how little they care about the OAS and how much it was seen as a US "thing" for which the US was by implication expected to pay.

There are counter-arguments. The OAS has been an important player in crisis management and electoral observations. With the adoption in 2001 of the Inter-America Democratic Charter, moreover, it has become a symbolic bulwark of democracy. More subtly, its very existence has provided a readily-available forum where the countries of the hemisphere could quickly engage in broad-based multilateral discussions of common problems. Finally, it embodies the hemispheric idea, anchoring a regional identity that is distinct from the rest of the world.

The problem with all those arguments, however, is that without exception, they have been breaking down in recent years. What the OAS provided in terms of diplomatic mediation and electoral oversight, ad-hoc groups of countries from the region and beyond can just as easily supply. Moreover, those diplomatic "services" were increasingly confined to Central America and the Caribbean, as the big South American countries, Brazil in particular, were strongly opposed to OAS' presence in "their" part of the hemisphere. Finally, the OAS' inability to effectively reverse the 2009 coup in tiny Honduras and its unwillingness to confront the deteriorating political situation in Venezuela have severely damaged the credibility of the Charter and by implication of the OAS as a bulwark of democracy in the region.

The issues of an hemispheric forum and of some kind of shared continental identity are closely linked: without a sense of "togetherness," there is little point in maintaining a permanent space for joint discussions. Along with many recent developments in the region, what this new crisis reveals is the breakdown of any such sense of a shared identity. The main reason is relatively simple: the continent that was embodied in the OAS was anchored in Washington and that continent does not exist anymore.

Since the end of the Cold War, the US has been disengaging from Latin America and the Caribbean. The region's has declined in importance as a destination for its investments, as a trade partner and as a security preoccupation. There lies the much-criticized US indifference to the region since Ronald Reagan's, with Obama's only the last. Close relationships and interests obviously do exist, but they are bilateral and sectoral.

This process has been mirrored in the region, with links to the US weakening drastically. Even Mexico has now announced that its trade dependence on the American market was now coming down. South America has long "graduated" from US dependence with Hugo Chavez' obsession with US imperialism sounding increasingly anachronic. The US matters, but along Europe and especially China.

Without the US, what is left? Well, a number of overlapping blocs and regions, whose joint issues are properly addressed in a number of overlapping institutions and forum, which is largelly why such arrangements have multiplied in recent years. What is more, these blocs and regions do not share a common agenda: what happens in Central America does not have much bearing on South America. And while say, drug wars in Colombia and Mexico may affect Central America and the Caribbean, they also impact West Africa and through it, Europe. The War on Drugs is thus a transcontinental issue that calls for a transcontinental forum.

Brazil, with all its talks of South American integration but all its diplomatic efforts in the US, Europe, Africa, the Middle East and Asia, is at the vanguard of this process of de-continentalization. Mexico, Colombia and Chile, looking intently towards China, are there too. From these countries' standpoint, a US-centred organization for a supposedly shared region is simply meaningless.

Now, to go back to the OAS, the amounts involved are so tiny that the organization could easily be bailed out. Expect many in Canada, with their dream of a neighbourhood where the country is not alone with the Big Guy next door, to call for a rescue. They will no doubt be joined by the well-meaning Americans who still see their country as a kind of uncle to the region and who lament its new "isolationism." The governments of Central American and Caribbean countries, who dominate the OAS assembly and get many of the plush jobs it provides, will join the chorus. In the end, they will probably win and a marvelous occasion will have been lost to have international institutional arrangements reflect a bit better the underlying economic, political and strategic realities of the world.

Monday, July 11, 2011

Latin America's other bloc

The background is the quiet confrontation that saw, on one side, Brazil support Christine Lagarde against Mexico's Agustin Castens for the top job at the IMF, and on the other Mexico's refusing to support the ultimately successful candidacy of Brazil's José Graziano da Silva for the FAO's directorship.

The foreground is Chile's Sebastián Piñera's two-day visit to Mexico, during which various agreements were signed and above all where the two announced they would collaborate on relations with Asia.

Like much diplomacy, especially Presidential diplomacy in Latin America, declarations are one thing, action something else altogether. In the current context, the noises from Mexico, however, have a deeper meaning. They point to the consolidation of a liberal/Pacific bloc in Latin America, made up of Mexico, Colombia, Peru, and Chile. This bloc has close links--trade, political and even military--with the US, and it looks frankly at Asia, mostly--though this is less true of Mexico--without much apprehension.

From Brazil's standpoint, this is bad, bad, bad, mostly because it challenges five basic tenets of its current foreign policy: 1) it keeps the US, albeit indirectly, very much in South America's picture and 2) it brings Mexico into it, both of which play against Brazil's attempt to carve South America out for itself; 3) it pointedly asserts that one can play a liberal card and win, which is very much at odds with Brazil's outlook; 4) it suggests that one should accept and capitalize on a global division of labour in which Latin America is a provider of natural resources and agricultural products, something that Brazil still refuses to do, in spite of the desindustrialization that has taken place in the country since the 1990s; and 5) it sinks the idea that Brazil could represent a unified region in global institutions.

Obviously, the news is worse for Chavez' Alba, which is even more deeply caught up in backward rhetoric, schizophrenic foreign policy--where deep and un-diversified dependence primary good exports is mixed with attempts at autonomous action-- and anti-US outlook, when the US is simply not a dominant force in the region any more.

Now, Humalla may change the game a bit if he clearly aligns Peru with Brazil, but if he is anywhere as pragmatic as his campaign has suggested, he will play along and join Andean countries' movement away from Brazil and its Atlantic dependencies.

Tuesday, July 5, 2011

Blindness: Christine Lagarde, the IMF and emerging powers

There is an intriguing piece in today's New Republic that asks "Why is the IMF Chief Almost Always French?"

The question is certainly warranted: since the Bretton Woods meetings in 1994, where France was not represented, five of its twelve managing directors have been French. The answers, from Harvard's Dani Rodrik and Jeffrey Frankel, and the Center for Global Development's Arvind Subrramanian, are also sensible: within the framework of the informal agreement according to which the World Bank would go to an American and the IMF to a European, given that the a Brit can never really be seen--including by many Brits--as a full-fledged European, and thanks to France's elite Public Sector prep-schools--les Grandes Ecoles-- the French have won "on merit" most times. Their fanatical attachment to these positions, the relative proximity of World War II still plaguing the Germans, their lack of seriousness the Italians, and the small size of their economies everybody else, round up the field of explanations.

All bland stuff. The interesting part is the paper's blindness to the absurdity of the arrangement given Europe's and France's quickly declining global status. With Asian economies building up reserves that dwarf the IMF's, Latin American countries now net creditors on global financial markets, and both Brazil and Mexico, along with China, Russia and India among the top 12 economies in the world, the powers that be at the IMF will have to choose between keeping the French in the driver's seat of a vintage gaz-guzzler, or getting a "Southerner" to drive a high-tech "zero-emission" speedster that will really get the world through the traffic.

Much more perceptive views can be gleaned from a different piece by Subramanian, who points out that the voting was rigged by rules that give European countries an overwhelming plurality of votes and that will have to change if the Fund wants to keep any degree of legitimacy. He also adds that Lagarde's election reflects the lack of unity of BRICS countries. A related point is taken up by Peter Hakim and Carlos Acosta Córdoba, who ask why Brazil did not support Mexico's candidate, and find an answer in Brazilians'--ultimately successful--brinkmanship to get the top job at the FAO, an endeavour that was not supported by Mexico.

Divisions among the BRICS and the big Latins come as no surprise: their interests are, to say the least, heterogeneous. For Western policy-makers and analysts to take for granted that no compromise can be reached among them, however, borders on schizophrenia.