The United States is Not Sending Their Best
On Election Day, with all polling aggregators predicting a comfortable victory for Hillary Clinton, concerns surrounding the Mexican economy appeared to dissipate. Throughout the last year, the value of the Mexican Peso ebbed and flowed in response to events in the US election. Strong debate performances by Clinton buoyed the Peso, while James Comey’s untimely letter to Congress on October 28th provoked a swift depreciation. On the night of November 8th, as voting tallies coming in from across the United States made it increasingly clear that a Republican victory was at hand, the Mexican Peso plunged to historic lows. In a span of five hours, the Mexico-US exchange rate went from 18.3 Pesos per dollar to 20.6 , a devastating devaluation of 9.3 percent for the Mexican currency.
As the saying goes, when the US sneezes, Mexico catches pneumonia. The geographical proximity, the volume of bilateral trade, and the economic interconnectedness between the two countries have made their fortunes inextricable from one another. This is especially true for Mexico, given that exports account for 36 percent of Mexican GDP and approximately 80 percent of those exports are intended forthe US market. With the Mexican economy already expected to underperform its growth projections for 2016, Donald Trump’s electoral victory could not come at a worse time. His vitriolic campaign rhetoric and overt hostility towards the Mexican people alone have put investors on high alert and increased uncertainty about Mexico’s economy. Now that Trump is set to assume the presidency, his campaign promises to rescind NAFTA and impose tariffs on Mexican imports directly threaten Mexico’s steady ascent to higher-middle income status.
Although Mexico will most likely suffer the first ramifications of the new administration, the economic and political threats of a Trump presidency extend equally to the rest of Latin America. The prospect of a new era of global economic closure and the US’s repudiation of the Transpacific Trade Partnership (TPP) are major causes for concern in the growing Pacific economies of Chile, Peru, and Colombia. A decrease in global trade would also mean a decrease in demand for commodities, presenting significant difficulties for commodity exporters like Venezuela, Ecuador, and Bolivia, not to mention the already depressed economies of the Southern cone—Argentina, Brazil, and Uruguay.
The prospect of unwarranted hostility from the incoming Trump administration and the discontinuation of President Obama’s hemispheric policies already threaten any increased cooperation between the US and its regional neighbors. Although the past decade has seen improvement in US–Latin America relations, Trump’s particular brand of diplomacy portends a return to a period in which the United States attempted to achieve its foreign policy objectives in the region through brute strength.
In the context of a multipolar international order, this approach is doomed to fail. Now more than ever, the United States’ strength derives from its alliances. With his unpredictability and isolationist policies, Donald Trump will undoubtedly jeopardize cooperation between the United States and Latin America. This will not only affect Latin American countries economically, but will also undermine the United States’ international standing.
The Better Neighbor Policy
Historically, the United States has worsened Latin America’s plight through coercion or neglect. From the establishment of the Monroe Doctrine onward, the United States has indiscriminately treated Latin America as its stomping ground – sending troops to and propping-up dictatorial regimes in the region well into the 1980s.
Following an ambiguous period right after the end of the Cold War, the 21st century has brought a positive turn to the previously fraught relations between the United States and Latin America. Even though the Bush administration failed on its promise to make Latin America a foreign policy focus when the region was relegated to a secondary priority after 9/11, improvements were instituted through new trade agreements and strategic cooperation in the war on drugs.
Much has been said about the Obama Administration’s pivot to Asia, but, beyond the clear strategic imperatives of tapping into the fastest growing region in the world, this policy initiative represents a grander effort to redefine the United States’ foreign policy aims. Embracing a more forward-looking vision for international relations, President Obama has shifted his attention away from more traditional areas of focus in Europe and the Middle East in order to improve the United States’ standing in the developing world.
As a result of this shift, initiatives to mend the gap between the US and its hemispheric neighbors have increased under President Obama. The most significant policy change has been the attempt to normalize diplomatic and economic ties with Cuba.
Since the Cuban Revolution in 1959, the Castro regime had reveled in its defiance of US hegemony. And, until the Obama administration’s decision to normalize relations, the United States had aimed to undermine that regime through sanctions, covert operations, and an aggressive economic embargo. This policy proved to be a failure; the embargo did not debilitate the Cuban state. Instead, it isolated the Cuban people from the rest of the world and legitimized Castro’s authoritarianism by providing an external threat which justified the regime’s existence. US policy towards Cuba has also had detrimental consequences for the United States’ image in Latin America. The US’s “tough stance” on Cuba made the US appear hostile and untrustworthy and galvanized anti-American sentiment in the region.
President Obama’s policy to reestablish diplomatic links with Cuba, after more than 50 years of hostility, has gone a long way in improving the US’s image in Latin America. With the reopening of the American embassy in Havana in August 2015 and the President’s visit to the island in March 2016, the United States has begun to reconcile strategic interests concerning Cuba with a positive approach to Latin America as a whole. Reincorporating Cuba in a wider community of nations will cast attention on the island, compelling it to abide by international norms and curbing its capacity to repress its population. In addition to the possible gains for US firms, increased exposure to international trade, foreign investment, and information technology will improve the lives of the Cuban people and loosen the regime’s strict control over economic, social, and political activity.
The Obama administration also made it a top priority to provide support for peace efforts in Latin America. The United States’ backing of the Colombian Peace Process, which would put an end to the longest running conflict in the region, is a prime example. With more than a quarter of a million lives lost and more than 6 million people internally displaced, the conflict between the Colombian government and the FARC guerillas (Fuerzas Armadas Revolucionarias de Colombia) has hampered Colombia’s development for more than fifty years. This conflict has also had broader destabilizing implications for the hemisphere, given that most of the guerrillas generate significant portions of their income through drug trafficking.
The previous initiative undertaken by the United States to improve the situation in Colombia, established during the Clinton Administration, earmarked nearly $1.3 billion in military aid to cut the supply of narcotics and prevent them from entering North America. Although these efforts helped diminish the military strength of the guerillas, they provoked a dramatic increase in civilian casualties during the early 2000s.
Adopting a more auxiliary role this time around, the Obama administration has focused its efforts on providing diplomatic assistance and direct monetary support, approximately $450 million, for peacebuilding and DDR (demobilization, disarmament, and reintegration). This has bolstered the Santos administration’s capacity to negotiate a ceasefire with the FARC guerrillas, opening the possibility of a durable peace in the years to come. This support has not only strengthened Colombia, a reliable US ally in the region, but it has also bolstered the United States’ credibility as a partner to Latin America.
Besides undertaking clear policy initiatives like those promoted in Cuba and Colombia, the Obama administration has also redefined the way the United States engages with Latin American leaders. This is most clear in the administration’s measured approach towards the hostile Latin American leaders that emerged during the Pink Tide of the 2000s. Faced with incendiary figures like Hugo Chávez, Cristina Kirchner, and Daniel Ortega, the administration has taken a calculated stance, choosing not to engage with these regimes head-on and instead waiting for them to collapse under their own weight. Furthermore, by allowing democratic politics to run its course in Latin America, the US has finally given room for endogenous institutional development to take hold. President Obama’s judgment has proven itself during his second administration. After the end of the commodity boom, market pressures kicked in and populist leaders have steadily lost power, opening new avenues for cooperation.
¿Capitalismo del Siglo XXI?
In addition to President Obama’s diplomatic efforts, several domestic developments throughout Latin America have increased the likeliness of hemispheric cooperation predicated on free markets and liberal democracy. Although this did not seem at all likely following the collapse of the FTAA (Free Trade Agreement of the Americas) in 2005, a combination of political changes within Latin American countries and the aforementioned advances by the outgoing administration have opened a new landscape in hemispheric diplomacy..
First, given the Obama administration’s more constructive policies for Latin America, goodwill towards the United States has increased significantly. According to Latinobarómetro, 69 percent of Latin Americans currently hold a positive opinion of the United States, compared to only 38 percent in 1996. This significant shift in public opinion generates momentum for regional cooperation and furnishes political capital for policies surrounding trade and investment.
Second, despite initial growing pains, Latin America has gradually integrated itself into the global economy. This has not only generated improvements in standards of living in the region, but it has also shifted the discourse surrounding market-oriented policies. Consequently, contemporary leftist parties have converged around the consensus of mainstream economists. Countries like Chile and Uruguay, which have been governed by the political left for more than a decade, have harmonized regulative and distributive policy with macroeconomic stability. Even less traditional party formations like Evo Morales’ MAS and Rafael Correa’s Alianza País have followed rather disciplined fiscal policies, despite what their rhetoric and distributive platforms might suggest.
Third, the consolidation of Latin American democracies and the move away from populist forms of governance – manifested in the recent electoral triumphs of Mauricio Macri in Argentina and Pedro Pablo Kuczynski in Peru – have made governments more inclined to pursue policies that promote the long-term wellbeing of their citizens. These changes in leadership also improve the climate for international negotiations.
One Step Forward, Two Steps Back
However, due to the unexpected turn of events in the US presidential election, these advances will most likely be put on hold indefinitely. Just as Latin America has begun to eschew its populist curse, a wave of anti-globalist sentiment across the Western world has culminated in Donald Trump’s rise to the presidency. The policies of the US President-elect towards Latin America, as espoused in the Republican Platform and Trump’s campaign speeches, could not be more antithetical to those of President Obama.
Since the beginning of his campaign, Donald Trump has promised to crack down on immigration, using inimical language to single out immigrants from Latin American countries as his main target. Moreover, his promise to build a wall at the Mexican border and have Mexico pay for it embodies the historic disdain that America has held towards the region. On more “serious” policy notes, Donald Trump’s criticism of NAFTA, his promises to place a 35 percent tariff on Mexican products, and his unfounded fixation on Mexico’s VAT tax raise concerns of a possible trade war that may cripple Mexico’s economy and harm the US in the process (since 12 percent of US total trade is with Mexico).
Donald Trump has expressed his vehement opposition to the current administration’s efforts to reestablish diplomatic ties with Cuba. In his campaign platform, he admonished “the current administration’s ‘opening to Cuba’ [as] a shameful accommodation to the demands of its tyrants.” His critique of the Cuban reset was a crucial talking point during his last campaign outings in Florida. Whether or not Trump the candidate was simply regurgitating Cold War tropes to appeal to Cuban-American voters, it is fair to say that any cooperation with Cuba does not seem to be in the cards – much less a repeal of the embargo, which would require the approval of a radically conservative Congress.
Already stymied by the significant setback that the Colombian Peace Process encountered as a result of the Colombian population’s rejection of the agreement in the October 2nd referendum, President Juan Manuel Santos will now have to negotiate a new agreement without the support of the US. Moreover, the $450 million allocation proposed by President Obama to support the peace process might face significant opposition. Although Donald Trump has yet to announce a position on Colombia, his isolationist foreign policy will likely not align with past instances of American leadership in that country.
Trump’s isolationism may also prove detrimental in ensuring democratic order in Venezuela, which is on the verge of a Constitutional crisis. Though the OAS (Organization of American States) has increased its criticism of the Venezuelan Regime, the extent to which Latin American countries can fully sustain collective democratic norms without the US playing a meaningful role remains unclear.
A regression in US–Latin American relations will also harm the United States. Certainly, losses from trade will disproportionately affect Latin American countries, given that the United States is by far the primary investor and largest market in the region. Nevertheless, the US itself stands to lose much from closing its markets to Latin American trade, given that 20 percent of its total trade is with Latin America.
From a geopolitical standpoint, the United States has even more to lose than Latin America. China, also an important player in the politics of the region, seems to be taking the US election results as an opportunity to increase its influence in Latin America. The Chinese premier, Xi Jinping, this November on his third trip to Latin America in just four years, signed bilateral agreements with Chile, Peru, and Ecuador – auguring closer ties in the absence of US engagement. In the instance of a hostile Trump presidency, the US may find itself lacking allies in the region and at the risk of losing influence internationally. Even though integration in Latin America has occurred disjointedly through different, and at times overlapping, regional institutions, there are newfound hopes for integration as the region moves towards liberal democracy and a market-oriented economy. Incidentally, the menace of a Trump presidency may actually push countries in the region further towards integration in order to counteract possible economic losses and even security threats – all the while leaving the US out of the picture.
Given the erratic and often contradictory stances that Donald Trump has conveyed throughout his political career, it is difficult to outline his agenda towards Latin America. If he governs in the same way he speaks, Trump will either completely antagonize the region or strain relationships by generating uncertainty around his policies. On the other hand, if he remains loyal to his platform, he will destroy the legacy of cooperation with Latin America that Barack Obama has worked to construct for the past eight years. In all of the possible scenarios, the United States stands to lose. Failing to continue the Obama administration’s initiatives in Latin America will not only be detrimental for the fortunes of the region, but will also harm the United States’ standing in the world.