The United States of America and Latin America:
Making the Case for a Positive Past and Future Relationship
David Knobel
Political Science 325: Politics of Latin America
Professor Haber
November 29, 2007
Introduction
The United States has had a long and mutually beneficial relationship with Latin America. Latin America has benefited from the security that comes with proximity to the United States. They have also benefited economically from migration and remittances, but most importantly, this relationship has promoted freedom, democracy, and free market capitalism within Latin America. This has benefited the United States through strong alliances during the ideological struggles of history. I use freedom and democracy to represent any form of constitutional electoral democracy the U.S. has promoted during ideological struggles as an alternative to colonialism, fascism, communism, and socialism. Free market capitalism represents the historical laissez faire economic approach the United States has had. With regards to foreign policy and Latin America it is specifically the Washington Consensus, neoliberalism, and free trade. Neoliberalism is manifested through the World Bank and the International Monetary Fund (IMF). Free trade includes the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) among other Free Trade Agreements (FTAs) with South American countries.
America should promote freedom, democracy, and free trade through multilateral institutions in Latin America to counterbalance the hard left, garner much needed support for the United States' broader foreign policy, and help the population of Latin America in general. By multilateral institutions I mean specifically the Organization of American States (OAS) and the United Nations (UN). By hard left I mean specifically Hugo Chavez of Venezuela, Rafael Correa of Ecuador, and Evo Morales of Bolivia. For broader foreign policy, the United States needs the support of Latin America in the struggle against anti-Americans such as Iran and Al-Qaeda. This paper suggests how this could be better achieved in the future.
A Mutually Beneficial Relationship
The American Revolution marked the beginning of the end of colonialism that would eventually sweep not only Latin America but the whole world. This marked the beginning of the long relationship between the United States and Latin America. In a letter to President Monroe in 1823, Thomas Jefferson said:
Our first and fundamental maxim should be, never to engage ourselves in the broils of Europe. Our second, never to suffer Europe to intermeddle with cis-Atlantic affairs. America, North and South, has a set of interests distinct from those of Europe, and peculiarly her own. She should therefore have a system of her own, separate and apart from that of Europe. While the last is laboring to become the domicile of despotism, our endeavor should surely be, to make our hemisphere that of freedom.
These sentiments reflect well how Latin America has benefited from the United States from a very early date. Latin America also benefited from the implementation of the Monroe Doctrine because for all practical purposes they never had to worry about Europe intervening in their affairs. No other region in the world has such a security guarantee from the United States.
As Raymont notes, “Latin America’s social institutions, cultural values and norms and economic and political systems have been fundamentally Western in character.” These common characteristics illustrate the deep ties between the United States and Latin America. The US benefited immensely from this shared past during World War II and the early years of the Cold War because, “…most Latin American governments supported Washington on every major foreign policy issue.” This is illustrative of the vast potential the relationship has and highlights the fact that the United States needs Latin American support to achieve broader foreign policy success. Latin America benefited because the United States gave fascism little chance of ever invading it.
Franklin D. Roosevelt’s Good Neighbor Policy, John F. Kennedy’s Alliance for Progress, and George H.W. Bush’s Enterprise for the Americas Initiative are all high points in the very special relationship Latin America and the United States have always had. No other region in the world has had such consistent offers of friendship and cooperation from the United States.
Another very important example of how Latin America has benefited from the relationship with the United States is remittances. The Second Report of the Inter-American Dialogue Task Force on Remittances reports:
At more than $50 billion a year, family remittances are central to economic growth, national expenditures, and balance of payments for many countries in Latin America and the Caribbean. Remittances now exceed portfolio investment, foreign aid, and government or private borrowing, and they have proven to be remarkably stable, often increasing when economies falter. Perhaps most importantly, remittances are reducing poverty and inequality in the region, with most transfers going to low-income families.
These remittances significantly benefit Latin America and would not be possible without the United States of America. These remittances are possible because of the strong ties between the United States and Latin America. With regard to remittance flows Manuel Orozco of the Inter-American Dialogue says, “The increase is due to a number of factors that include… strengthened ties between the U.S. and Latin America…”
Freedom and Democracy
When the United States won the Cold War economic freedom and democracy were promoted to the benefit of Latin Americans. Regimes all across the region were elected democratically and then embraced the free market. These incipient democratic regimes looked to the United States for leadership and support that had not always been there. The United States throughout the Cold War tacitly supported brutal dictatorships in the name of stability and anti-Communism, and even violently overthrew leftist governments through use of the CIA. The United States intervened militarily on more than one occasion, causing some to accuse the United States of not truly promoting freedom and democracy but rather acting in the national and corporate interests. Bill Clinton went as far as to say Washington’s involvement in Guatemala’s civil war was “wrong.”
I posit that although the United States has supported human rights abusers in the past and not always acted in the democratic interests of Latin America, the U.S.’s successes over colonialism, fascism, and communism that have contributed to the rise of democracy and freedom have, on balance, benefited the people of Latin America far more than the costs associated with past mistakes.
The Free Market, Neoliberalism, and Free Trade
The U.S. economist John Williamson wrote ten policies that he thought everyone in Washington agreed with and called it the Washington Consensus at the beginning of the 90s. “The phrase has come to be identified with the neoliberal policies promoted particularly by international financial institutions such as the World Bank, the International Monetary Fund, and the Inter-American Development Bank during the 1990s, and as an important foundation for U.S. policies toward the rest of the Americas during that decade.” This was a response to the failure of import substitution industrialization and the failure of state led economies all across the globe. Many governments in Latin America faced massive debt burdens, large budget deficits, and runaway inflation, not to mention the problems associated with the hugely inefficient bureaucracies that existed in many countries where the state had a large presence in the economy. Protectionism failed and demonstrated the viability of export led growth as a developmental alternative.
The debt crisis that began in the early 1980s caused many Latin American countries to look to the IMF and World Bank for loans. These loans were given only if governments agreed to institute neoliberal economic policies such as privatization, deregulation, decreased government spending, and lower trade barriers. Many countries got structural adjustment loans and most of Latin America eventually put these ideas into effect during the 1990s. However, many countries didn’t follow through with important aspects of the reform process. The subsequent languishing of economies in the region during the 90s and into today has caused a great controversy over whether the Washington Consensus failed miserably, or whether the failure is due to the incomplete implementation of reforms. On one side, Hugo Chavez claims to be entering a “new era of 21st century socialism” that is anti-globalization and anti-American. On the other side, the true neoliberal would say more domestic reforms are needed.
I suggest that the neoliberal reforms have helped countries in the region maintain stability, even social democracies like Chile and Costa Rica, and that no more domestic reforms are needed other than the implementation of free trade agreements. Social democracy and neoliberal reforms may seem incompatible, but they can complement each other. If populism and over spending create large budget deficits that cause inflation, social democracies can stabilize the economy by following principles of the Consensus. They can benefit in the world economy because of their history of investment in education, health, and infrastructure that makes them competitive in free trade. Neoliberal reforms do not need to erode the ability of states to maintain a level of social welfare. In fact, in a study of four social democracies it was found that, “They have, with varying degrees of success, managed the transition to market openness while maintaining vastly more social protections than neighboring societies.”
Free trade is an area where the U.S. and Latin America can cooperate and make alliances. Open markets with no tariffs or quotas create efficiency through the economic concept of comparative advantage. If one country is better at producing one good and another country is better at producing a different good, then by all means they should produce those goods and trade with each other; everyone will be better off. The first manifestation of this idea in Latin America was through NAFTA. One of its main objectives was to increase trade and it did because, “Since 1993, the value of two-way U.S. trade with Mexico has almost tripled, from $81 billion to $232 billion, growing twice as fast as U.S. trade with the rest of the world.” Mexico is America’s number two trading partner. Free trade also helps to democratize and decentralize governments, as Mexico demonstrated when the regions longest lasting authoritarian regime democratized in 2000. It has helped to liberalize not only its economy but its political system as well.
Through NAFTA and CAFTA and other agreements like the Peru-FTA the United States has made deals with eleven Latin American countries. These deepen the interdependence between the U.S. and Latin America and contribute to cooperation in other areas. Economic freedom breeds political freedom, and in the current ideological struggle with the hard left, the United States supports freedom. In the long pattern of cooperation and general agreement between the U.S. and Latin America, free trade deals are a milestone.
Prescriptions for the Future
The United States needs Latin America as much today as at anytime in the past, and perhaps even more. The United States needs to consolidate and improve past relationships by promoting freedom, democracy, and free trade to achieve success in broader foreign policy issues. The precedent in the past of Latin American support for U.S. foreign policy as illustrated in World War II and the Cold War (with the exception of Cuba) is not to be taken for granted. The hard left represents a formidable challenge, especially when considering the fact that, “In January 2007, Ahmadenijad made his second visit to the region in five months to meet with Chavez in Venezuela, visit Ortega in Nicaragua, and attend Rafael Correa’s inauguration in Ecuador.” The combined forces of the hard left and the fanatical anti-Americanism of Iranian President Ahmadenijad could spell disaster for the United States if attempts to deepen democracy, promote freedom as an alternative to the authoritarianism of Chavez, and promote free trade deals with the U.S. as an alternative to anti-Americanism fail.
The United States should work through the OAS and the UN to pass resolutions deploring and condemning the authoritarianism of Chavez and his followers on the hard left and supporting and promoting democracy. This would be largely symbolic but an expression of this opinion by one of these international bodies could demonstrate hope for the region.
To counter the hard left and help the population of Latin America in general, America should make more of an effort to address the issue of inequality. Latin America is the most unequal region in the world and if this is not addressed it could provide fertile ground for more Chavez style revolutions. The United States should address this issue by expanding on President George W. Bush’s Millennium Challenge Accounts and his other programs to “advance the cause of social justice in the Western Hemisphere.” The United States can promote freedom and democracy at the same time by giving aid to governments that promote freedom, democracy, and free trade.
The United States should promote free trade as a way to increase security and help the citizens of all countries involved. The Heritage Foundation lists six ways a Peru-U.S. FTA serves U.S. interests, “It benefits the U.S. economy, it counters anti-American sentiment, it rewards pro-market progress, it fosters stability in a highly unstable region, it supports a key ally, and it nurtures a growing trade bloc.” It will help producers in both countries through greater market access and consumers in both countries through less expensive products.
The United States should negotiate in good faith and lower its own barriers to trade, especially in the agriculture sector. Powerful lobbying groups have prevented lowering agricultural subsidies and import quotas to the chagrin of many countries, so to solidify free trade gains the United States should be fair and not use power to the disadvantage of smaller countries.
Conclusion
I have demonstrated that the U.S. and Latin America have had a mutually beneficial relationship that can and should continue. Unfortunately, public opinion about the United States is and has historically been low in Latin America. Not only that, but Americans seem disinterested and unknowledgeable about the region. Both of these facts contradict the historical closeness of the two regions. The low polling numbers reflect personal situations of poverty rather than an objective view of the relationship. The indifference towards the region of many Americans reflects a profound misunderstanding of the importance Latin America has played in the history of the United States.
Although there have been past exploitations of the region by the United States, both economically and militarily, the relationship has on balance been positive. The current situation where the majority of the region lives in democracy and economic freedom illustrates this point well. The number of trade agreements attests to the strong ties. The future is positive for both regions if democracy and freedom can be institutionalized with the help of multilateral institutions. If U.S. foreign aid can lessen the inequality, all interests will be served, but most notably the poorest in the region will benefit. This would help the United States by lessening the chance of socialist revolutions. The U.S. and Latin America will become more interdependent with the passage of more FTAs and both will have increased security.
I’m confident that in the ideological struggle of our time between democracy and capitalism or Hugo Chavez style socialism and Mahmoud Ahmedinijad style theocracy, Latin America will side with the United States.
Bibliography
Paul Haber, PSC 325; Politics of Latin America, Lectures from fall 2007.
Henry Raymont, Troubled Neighbors the Story of US-Latin American Relations from FDR to the Present (Century Foundation: Westview Press, 2005).
Second Report of the Inter-American Dialogue Task Force on Remittances, Making the Most of Family Remittances (May 2007).
Manuel Orozco, The Role of Remittances in Leveraging Sustainable Development in Latin America and the Caribbean, (Inter-American Dialogue, March 6, 2007).
Charles Babington, “Clinton: Support for Guatemala Was Wrong,” Washington Post, March 11, 1999.
Dan Restrepo, The United States and Latin America: After the “Washington Consensus, (Annual Progressive Forum, September 27, 2007).
Michael Shifter, Hugo Chavez a Test for U.S. Policy, (Inter-American Dialogue, March 2007).
Richard Sandbrook, Marc Edelman, Patrick Heller, Judith Teichman, Social Democracy in the Global Periphery Origins, Challenges, Prospects, (Cambridge University Press: New York, 2007).
Daniel Griswold, NAFTA at 10: An Economic and Foreign Policy Success, (Center for Trade Studies: Free Trade Bulletin, December 2002).
Ana Isabel Eiras and Stephen Johnson, Six Strategic Reasons to Support a U.S.-Peru Free Trade Agreement, (Heritage Foundation: July 24, 2006).
