Today's date:
Winter 2001

The United States and Latin America at Century's Turn

Abraham F. Lowenthal, professor of international relations at the University of Southern California, is the founding president of the Pacific Council On Inter-national Policy.

This article is adapted from a longer essay prepared at the invitation of Politica Externa in Rio de Janeiro and draws on the Astor Lecture Dr. Lowenthal delivered at St. Antony's College, Oxford.

Rio De Janeiro
- Latin America has been transformed in multiple ways during the past five decades. Its societies have changed from mainly rural to largely urban. Although its population has grown fast-it has more than doubled since 1950-a decisive demographic transition has occurred, and rates of population growth have sharply declined as Latin America's people have become more modern and literate, dramatic health improvements have occurred, and the role of women has radically changed. Latin America's economies have become more industrial, and better integrated into the world economy. And the region's politics has moved from prevailing and persistent authoritarianism of various kinds toward different versions and degrees of democratic governance.

State-centered economies have given way in almost every country to more open and competitive free markets. Throughout Latin America and the Caribbean, it came to be widely accepted by the early 1990s that it was essential to bring inflation under control by increasing tax collection, reducing public expenditures and fiscal deficits, and improving public sector efficiency. It became conventional wisdom, as well, that the import-substitution approach to economic growth-however successful it was or seemed in some countries during the 1950s and 1960s-had been exhausted everywhere, and that the region's economic growth depends primarily on boosting exports, which in turn requires market openings, realistic exchange rates, and an end to various subsidies and other forms of protection.

It also became broadly agreed that Latin America needed to sharply prune many of the state's industrial and excessive regulatory activities, privatize most public enterprises, facilitate competitive markets, stimulate the private sector, and attract foreign investment. Although often dubbed the "Washington Consensus," this approach has in fact been embraced by most contemporary Latin American policy-makers. So have important Institutional changes, such as the establishment of independent central banks in a number of countries. Growing skepticism about the "Washington Consensus," especially in its extreme neo-liberal version, has been emerging in many settings as Latin America's social problems mount, and changes in emphasis and approaches are likely, but few actors, if any, really want to restore the inward-looking, statist economies of yesteryear.

Equally striking has been the broad accord on the desirability of constitutional democratic politics. In the late 1960s, self-proclaimed "vanguards" on the left and "guardians" on the right openly expressed disdain for democratic procedures, and both of them claimed significant followings. Since the 1980s, however, a wide spectrum of Latin American opinion has come to recognize the value of democratic governance. It is a nearly universally accepted norm in Latin America today that to be legitimate, government authority must derive from the uncoerced consent of the majority, tested regularly through fair, competitive and broadly participatory elections. Elections have become the rule in Latin America, attempted military coups have become very rare, and multilateral pressure to maintain constitutional procedures has been legitimized. Again, although disenchantment with electoral democracy has climbed and undemocratic practices are still widespread, virtually no one is calling openly for a restoration of authoritarian rule.

A broad regional turn toward more harmonious relations with the United States has also been evident. For years, many Latin American states had defined their foreign policies primarily by expressing independence from and even outright opposition to Washington. Today, however, Latin American governments and many opposition movements in Latin America actively seek closer ties with the US, a trend no doubt facilitated by the regional turn around market economics and democratic governance. Beyond Mexico's decisive commitment to NAFTA, most other Latin American governments have been striving to improve their relations with the US, although they remain understandably wary of Washington's potential to revert to unilateral, interventionist and punitive approaches. Even Cuba might by now be open to some form of normalization if US policy were not still being made, to a considerable extent, by Cuban exiles in Miami.

The openness to the US is not limited to the policy realm; indeed, equally or more important is the broad educational and cultural turn in Latin America toward the US. Over the past fifty years, the cultural sway of the US has overwhelmed previously dominant European influences throughout Latin America and the Caribbean, even in the nations of the Southern Cone. Latin Americans increasingly watch US-made films and cable television programs, listen to music fashioned and promoted in the US, wear US-designed clothes, get their information on world and even on Latin American events from US sources, and pursue graduate studies in the US. The links between Latin America and the US have multiplied and strengthened in recent years, reinforced by communications and transportation technologies and by massive migration.

Latin American countries have generally been undertaking, as well, closer economic and political cooperation among themselves. This is true, to varying degrees, in the Caribbean, Central America, the Andean region, and especially in South America-where MERCOSUR, the common market arrangement centered around Brazil and Argentina, had become increasingly robust until economic troubles in both countries began to strain their relations at the end of the 1990s. Latin Americans are participating in and promoting vigorous intra-regional trade, investment and cultural exchange. The infrastructure for regional integration-both human and material-has been greatly strengthened. Particularly in the Mercosur region, the economic and institutional landscapes have been transformed, as dams and highways are knitting the region's power and transport grids. Latin American countries are less engaged in border skirmishes and other bilateral recriminations than they used to be. Several of the major outstanding boundary and territorial disputes in South America have been resolved in recent years, although some still fester or occasionally flare up, and the troubling situation in Colombia together with the exuberant Bolivarian vision of Venezuela's Chavez may lead to new issues.

THE HEMISPHERE | These and other international, regional and national considerations are combining to produce new patterns of Western Hemisphere relations that can only be comprehended by disaggregating such abstractions as "Latin America" and the "US." US government relations with some parts of Latin America and the Caribbean contrast sharply with those in other subregions. Some elements of US society have relationships with Latin American counterparts that differ markedly from official relationships. Official and transnational relationships on some issues are highly cooperative, and on others deeply conflictive. The actors, the interests and the issues of US-Latin American relations are increasingly complex.
As a contribution toward understanding US-Latin American relations at the century's turn, I would offer the following observations:

The central fact of inter-American relations continues to be the vast asymmetry of power between the US and every other country of the Americas. Striking differences abound in military, economic, technological and institutional strength. The US is far more important to every Latin American country than any Latin American country is to the US.

Many important issues in US-Latin American relations-regarding commercial and financial rules and management, for example-are mainly framed by actors and considerations external to the region. Policies crucial for Latin America's future are routinely set elsewhere, and their impact on Latin America is usually more inadvertent and residual than intentional. On many issues, Latin Americans continue to be highly vulnerable to exogenous events, trends and decisions. It is hard to exaggerate how many other issues and relationships compete with Latin America for the attention of senior US policy makers.

In its dealings with Latin America, the US was never as coherent, unitary and rational an actor as was often portrayed from the South, but the pluralism of the US has become much more pronounced in recent years. The interests of the various elements in US society are highly diffuse and often contradictory. US policies are shaped by the interplay of inžuences from different regions, sectors and groups: the Rust Belt and the Sun Belt; business and labor; growers, agricultural workers, and consumers; immigrant organizations and anti-immigration lobbies; ethnic organizations; church people of varying persuasions; criminal organizations and the police; as well as groups formed to promote human rights, champion women's causes, protect the environment and preserve public health. Multiple relevant actors enjoy access to policy-makers in the extraordinarily diffuse and permeable US policy process, making US policy relatively easy to influence but very hard to coordinate or control, even when concerted attempts to do so are undertaken.

The relative importance for inter-American relations of private actors-corporations, unions, the media and non-governmental actors of many types, including ethnic, community-based and faith-based organizations-has mostly increased, while the scope and influence of national governments have declined.
In Latin America today Microsoft is much more important than the US Marines. American Airlines and United Airlines matter more than the 82nd Airborne or the US Air Force. CNN and the Bloomberg wire are far more influential than the Voice of America. AIG (the insurance company) is more significant than AID. Human Rights Watch is in many circumstances more powerful than the Pentagon. Moody's and Fidelity are often more relevant than the CIA. And the World Economic Forum at Davos, a private organization, is much more central than the OAS.

When it comes to the undoubted continuing influence of governments, in turn, the relative influence of different parts of the US governmental apparatus for inter-American relations has changed dramatically in recent decades. For Latin America today, or at least for specific countries, the Secretary of the Treasury is far more important than the head of the CIA. The governors of California, Texas and Florida are much more significant than the general in charge of the Southern Command. The heads of the National Drug Control Office and the Drug Enforcement Agency as well as members of the federal judiciary are often more relevant than the Secretary of State or the Assistant Secretary for Inter-American Affairs. For most Latin American countries, on most issues, the US Congress is at least as important as the executive branch, often more so, in fact-and the Congress is even more permeable to diverse societal impulses than the Executive.

DISAGGREGATE | Latin America, too, requires disaggregation. All along, Latin America and Caribbean countries have differed enormously among themselves. They range from mini-states to a mega-country; they include states whose inhabitants are almost exclusively of European origin, others with a strong African presence and still others with large and not yet fully integrated indigenous populations. Some Latin American countries have abundant natural resources, while others have few. Some developed strong civilian political institutions decades ago, while others did not. Such differences have made Argentina as different from Haiti, or Peru as different from Panama, as Sweden is from Turkey or Australia from Indonesia.
But Latin America's long-standing internal differences are growing, particularly along four dimensions: the nature and degree of economic and demographic interdependence with the US, the extent to which the countries have committed their economies to international competition, the relative capacity of the state and the strength of democratic norms and institutions. Increasing differentiation along these four dimensions makes the very term "Latin America" of dubious utility at this point; it probably obscures as much as it illuminates.

The differences in the nature of US relations with the various countries and sub-regions of Latin America, always a factor undermining region-wide policies and generalizations, have consequently increased over time.

To understand inter-American relations today, one must sharply distinguish from the rest those countries most closely integrated with the US in economic, social and demographic terms. Mexico, Central America and the Caribbean together account for only a third of the total population of Latin America and the Caribbean (LAC) but for nearly half of US investment in the Latin American region, more than 70 percent of inter-American trade, nearly 60 percent of US bank exposure in the region, and some 85 percent of Latin American immigration to the US.

The Mercosur nations together account for 45 percent of LAC's population, nearly 60 percent of LAC's GDP, more than 40 percent of US investment in LAC (and a steadily growing share) but less than 15 percent of US-Latin American trade and considerably less than 10 percent of LAC migration to the US. The troubled nations of the Andean region account for nearly 22 percent of the Latin American population, just 13 percent of its GDP, about 10 percent of US investment, less than 15 percent of US-Latin American trade, but nearly all of the cocaine and heroin imported from the Western Hemisphere to the US.

The differences among the different regions in their relationships with the US are growing larger over time. In commercial terms, for example, of the Latin American and Caribbean countries that sent more than 40 percent of their exports to the US in 1980, all of them in the 1990s exported to the US an even higher percentage. Of the Latin American countries that sent less than 30 percent of their exports to the US in 1980, all had smaller percentages of their exports to the US in the late 1990s. A major explanation, of course, is geography-that is, proximity-but geography is constant and proximity presumably should have become less significant as technology improves. Policies themselves have been reinforcing a bipolar pattern of relations with the US, with the Caribbean Basin region and the Southern Cone moving in opposite directions.

Hispanic Diaspora | The nature and dynamics of US relations with Mexico and the Caribbean Basin region is becoming ever more unique. The US has become an even more overwhelming economic, cultural and political influence on its border region as a result of migration on the one hand, and the effects of improved communications and transport, on the other. By the same token, the vast and growing Mexican, Central American and Caribbean diasporas in the US are irreversibly changing the contours of US relations with these closest neighbors.

Politicians, business strategists, advertisers, bankers, employers, unions, educators, law enforcement officials and medical doctors all know that the frontier between the US and its closest neighbors is somewhat illusory. It is hard to define the border between Latin America and Anglo America today, but it is certainly well north of San Diego in the West and of Miami in the East. Remittances from the diaspora are vital to the economies of Mexico and many Central American and Caribbean nations; in Mexico, for example, remittances amount to at least $7-8 billion a year, almost as much as direct foreign investment; in Central America and the Dominican Republic, remittances exceed foreign investment and foreign economic assistance as sources of capital. Campaign contributions and the votes of the diaspora are crucially important in home country politics. Juvenile gangs and criminal leaders socialized in the US are wreaking havoc in their countries of origin, in many cases after being deported by the US.

During the next 25 years, the Caribbean and Central American nations are likely to become even more fully absorbed into the US orbit: using the dollar as their currencies; sending almost all their exports to the US; relying largely on US tourists, investment, imports and technology; absorbing US popular culture and fashions; sending many migrants northward; and developing baseball players for the North American major leagues (and perhaps eventually felding major-league teams of their own). All these statements will probably also apply to Cuba in time, perhaps sooner rather than later; already Cuba's dollar economy is growing in importance.

Mexico, Central America and most of the Caribbean countries are by now so closely tied to the US on so many fronts that their futures are to a very large degree conditioned by what happens on the mainland and by US policies. Generalizations about the Caribbean Basin frequently do not apply to South America, and vice versa, because of the former's extraordinary degree of interdependence with the US.

As compared with the last 25, 50 or 100 years, the focal points of US-Latin American relations at the century's turn are much less than previously related to security and geopolitics, and also much less about ideology, at least in the overt political sense. Security, geopolitical and ideological issues tended to engage the US on a region-wide basis, but today's agenda is more specific and local. US concerns in Latin America today are much more about practical issues of trade protection and finance, on the one hand, and on the other about managing shared problems that cannot be resolved by individual countries alone: e.g., the narcotics traffic, public health, migration and the environment. With regard to all these transnational issues, elements of cooperation and conflict combine in the Americas in complex ways that do not necessarily correlate with national boundaries.
Finally, the next US administration should be aware of how much of the US relationship with Latin America is determined by policies that are not designed with the region in mind. Probably the most important US official for Latin Americans is the chairman of the Federal Reserve Board, for US interest rates are a crucial determinant of Latin America's economic prospects. How the US economy does, more generally, is the single biggest factor in shaping the economic performance of our closest neighbors. How American democracy deals with challenges of participation, finance and accountability and with Florida's imbroglio and its aftermath will ultimately have more influence on Latin America than democracy promotion programs. Cinema, television and music from the US exert a very powerful influence, as do US institutions of higher education and research. The Colossus of the North is bound to cast a large shadow southward, no matter which direction our policy-makers face. "Paying more attention" to Latin America is less useful as policy advice than being much more self-conscious about our own multiple impacts.

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