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THE POLITICAL ECONOMY OF GENDER IN THE TWENTIETH-CENTURY
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Gabriel G. Casaburi
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INTERNATIONAL POLITICAL ECONOMY AND MASS COMMUNICATION IN CHILE
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Tricia Juhn
NEGOTIATING PEACE IN EL SALVADOR
Civil–Military Relations and the Conspiracy to End the War
Shaw
Gordon Mace, Andrew F. Cooper and Timothy M. Shaw (editors)
INTER-AMERICAN COOPERATION AT A CROSSROADS
Don Marshall
CARIBBEAN POLITICAL ECONOMY AT THE CROSSROADS
NAFTA and Regional Developmentalism
Eul-Soo Pang
THE INTERNATIONAL POLITICAL ECONOMY OF TRANSFORMATION IN
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Shaw
Inter-American Cooperation
at a Crossroads
Edited by
Gordon Mace
Professor, Department of Political Science and School of Advanced International Studies, and
Director of the Inter-American Studies Centre, Université Laval, Canada
Andrew F. Cooper
Distinguished Fellow, The Centre for International Governance Innovation (CIGI), Canada
and Professor, Department of Political Science, University of Waterloo, Canada
Timothy M. Shaw
Professor and Director, Institute of International Relations, University of the West Indies,
St. Augustine, Trinidad and Tobago, and Senior Fellow, The Centre for International Governance
Innovation (CIGI), Canada
Shaw
Introduction, selection and editorial matter © CIGI and Gordon Mace 2010
Individual chapters © contributors 2010
All rights reserved. No reproduction, copy or transmission of this
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First published 2010 by
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Inter-American cooperation at a crossroads/edited by Gordon Mace, Andrew F.
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Includes bibliographical references and index.
ISBN 978–0–230–24361–3 (hardback)
1. Pan-Americanism. 2. Latin America—Relations—United States. 3. United
States—Relations—Latin America. I. Mace, Gordon, 1947– II. Cooper, Andrew
Fenton, 1950– III. Shaw, Timothy M., 1945–
F1418.I5953 2011
327.98073—dc22
2010034182
10 9 8 7 6 5 4 3 2 1
19 18 17 16 15 14 13 12 11 10
Printed and bound in Great Britain by
CPI Antony Rowe, Chippenham and Eastbourne
Shaw
The Centre for International Governance Innovation (CIGI) is an independent,
non-partisan think tank that addresses international governance challenges.
Led by a group of experienced practitioners and distinguished academics,
CIGI aims to anticipate emerging trends in international governance and
to strengthen multilateral responses to the world’s most pressing problems.
CIGI advances policy ideas and debate by conducting studies, forming net-
works and convening scholars, practitioners and policy makers. By operating
an active program of publications, events, conferences and workshops, CIGI
builds capacity to effect change in international public policy. CIGI was
founded in 2001 by Research In Motion (RIM) co-CEO and philanthropist
Jim Balsillie, who serves as CIGI’s chair. CIGI is advised by an International
Advisory Board.
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Contents
Introduction 1
Gordon Mace, Andrew F. Cooper and Timothy M. Shaw
Part I A Changing Landscape
1 Hemispheric Relations: Budding Contests in the Dawn of a New Era 23
Diana Tussie
2 The Obama Administration and Latin America: Towards a New
Partnership? 43
Daniel P. Erikson
3 The Caribbean in a Turbulent World 60
Norman Girvan
Part II Responding to Challenges
4 Economic Integration in the Americas: An Unfinished Agenda 81
Antoni Estevadeordal and Kati Suominen
5 Building on Sub-Regional Economic Integration Projects to
Forge an Energy and Climate Partnership of the Americas 95
Thomas Andrew O’Keefe
6 Demise of the Inter-American Democracy Promotion Regime? 111
Thomas Legler
7 A More Secure Hemisphere? 131
Rut Diamint
8 Poverty Reduction and the Role of Regional Institutions 153
Nicola Phillips
Part III The Effectiveness of Other Institutions
9 The Successes, Failures and Future of Mercosur 171
Marc Schelhase
vii
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viii Contents
10 Ruling the North American Market: NAFTA and its Extensions 187
Louis Bélanger and Richard Ouellet
11 New Forms of Integration: ALBA Institutions and Mechanisms 204
Josette Altmann
Part IV Reconstructing a Regional System for the Americas
12 Middle Powers and Hemispheric Diplomacy: Towards an A10 225
Jorge Heine
13 What Role for the Private Sector in Inter-American
Multilateralism? 242
Richard E. Feinberg
14 Conclusion: The Fragile Legitimacy of Inter-American
Institutions 261
Gordon Mace and Jean-Philippe Thérien
Index 275
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List of Tables and Figures
Tables
Figures
ix
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Foreword
Imagining without Building the
Sub-Regions of the Americas
Robert A. Pastor
The idea of the Americas was born of two unusual ironies five centuries ago.
First, Christopher Columbus claimed to have discovered the region and yet
he met large numbers of people who were already here. He compounded
his error by calling them ‘Indians’, believing he had arrived in South Asia,
missing his destination by half a globe. The second irony was a joke on
Columbus: his magnificent achievement was named by a German publisher
to honour another Italian navigator, Amerigo Vespucci, who again ‘discovered’
the ‘Americas’ several decades later.
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Foreword xi
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xii Foreword
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Foreword xiii
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xiv
Table 0.1 Indicators for the Americas, 1980–2006
Group or Population GDP (billions USD) Exports Imports Trade (a) Total Trade
country (millions) (billions USD) (billions USD) as % of (billions
GDP USD)
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CACM 36.7 4.3% 21.0 87.2 0.5% 6.0 20.9 8.5 39.5 69.3% 60.4 1.2%
Guatemala 13.0 7.9 30.2 1.9 6.0 2.5 11.9 59.3% 17.9
El Salvador 6.8 3.6 18.7 1.2 3.7 1.5 7.7 61.0% 11.4
Costa Rica 4.4 4.8 22.2 1.4 8.2 2.1 11.5 88.7% 19.7
Honduras 7.0 2.6 10.8 1.0 2.0 1.3 5.4 68.5% 7.4
Nicaragua 5.5 2.1 5.3 0.5 1.0 1.1 3.0 75.5% 4.0
The Americas 845.5 100.0% 3,726.1 17,154.8 100.0% 492.2 2,018.8 527.7 2,821.4 28.2% 4,840.2 100.0%
xv
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xvi
Table 0.2 Western Hemisphere: Total and intraregional exports, 1994–2004 (millions
of US dollars and percentages)
1994 1995 1996 1997 1998
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xvii
(Continued)
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xviii
1. Western Hemisphere includes Latin America, Canada, and the United States. There are gaps in
some years for some Caribbean countries.
2. Latin America and the Caribbean includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa
Rica, Dominican Republic (except 1998–2004), Ecuador, EI Salvador, Guatemala, Honduras,
Mexico, Nicaragua, Panama (except 1994), Paraguay, Peru, Uruguay, Venezuela and Caricom (see
note 3 for exceptions). Caricom data for 2004 are not available.
3. Caricom includes Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St Kitts and
Nevis, St Lucia, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago, because of
the unavailability of data for the other Caricom member states. Totals exclude Bahamas (1994–96,
2002–03), Guyana (1994–97, 2003), St Kitts and Nevis (1996) and Suriname (2002–03).
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xix
4. AAGR: Average Annual Growth Rate: Calculated using the formula [(Y(t)/Y(s))(1/n)–1]*100,
where Y(t) and Y(s) are the values in years “t” and “s”, respectively, where t > s and n ⫽ t–s.
For Caricom the formula is based on the 1994–2003 period.
Source: IDB, Integration and Regional Programs Department, based on data from DataIntal, ALADI,
SIECA, Hemispheric Database, UN Comtrade and official country data
Note: There are periodic changes in data sources. This is especially pronounced between
2003 and 2004. Although the data are generally consistent, these changes in sources can affect
results
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Acknowledgements
xx
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Acknowledgements xxi
collaboration in 2009 and in 2010 around the NETRIS Edulink network. IIR
looks forwards to further such mutual cooperation.
The colloquium also benefited from the organizational talents of Joe
Turcotte at CIGI and Nicolas Diotte at CEI. Their assistance in the prepara-
tion of application grants, in efficient management of logistics, and their
attention to details helped considerably and was deeply appreciated. The
staff and volunteers at UWI and IIR worked to ensure that the colloquium
unfolded without a hitch. Special thanks go to Marilyn Ramon-Fortuné at
UWI for her diligence and courtesy while hosting the event.
The preparation of the volume itself was made much easier with the
expert editorial assistance of Joe Turcotte at CIGI. Our gratitude to Joe,
and to Alexandra Webster and Renée Takken at Palgrave Macmillan, who
supervised the publication process with courtesy and efficacy. Max Brem
(CIGI’s Senior Director for Publications), Jessica Hanson (CIGI Publications
Coordinator) and Andrew Schrumm (Research Officer at CIGI) provided
much sage advice and counsel throughout the process.
As is the case of all CIGI projects Thomas A. Bernes, the acting execu-
tive director, created an environment amenable to productive research.
CIGI was founded in 2001 by Jim Balsillie, co-CEO of RIM (Research In
Motion), and collaborates with and gratefully acknowledges support from a
number of strategic partners, in particular the Government of Canada and
the Government of Ontario. Le CIGI a été fondé en 2001 par Jim Balsillie,
co-chef de la direction de RIM (Research In Motion). Il collabore avec de
nombreux partenaires stratégiques et exprime sa reconnaissance du soutien
reçu de ceux-ci, notamment de l’appui reçu du gouvernement du Canada et
de celui du gouvernement de l’Ontario.
Finally, this volume can be considered in some ways as a companion to
the Andrew F. Cooper and Jorge Heine collection Which Way Latin America?
Hemispheric Politics Meets Globalization (United Nations University Press,
2009) and to the Gordon Mace, Jean-Phillipe Thérien and Paul Haslam
volume Governing the Americas: Assessing Multilateral Institutions (Lynne
Rienner Publishers, 2007). The former looks more at Latin America’s strate-
gic calculus in the wake of recent world transformations while the latter also
examines hemispheric institutions but without the benefit of a comparative
analysis and without the insights of a post-economic crisis situation. The
three collections, however, do offer a useful package for the understanding
of present day inter-American relations.
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Notes on Contributors
xxii
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Notes on Contributors xxiii
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xxiv Notes on Contributors
Jorge Heine holds the Chair in Global Governance at the Balsillie School
of International Affairs, is Professor of Political Science at Wilfrid Laurier
University and is a Distinguished Fellow at The Centre for International
Governance Innovation. He was previously Ambassador of Chile to India,
Bangladesh and Sri Lanka (2003–7). He has also been Ambassador to South
Africa (1994–9), as well as a cabinet minister in the Chilean government. He
has been a Visiting Fellow at St Antony’s College, Oxford, and a Research
Associate at The Wilson Center in Washington, DC. He is the author, co-
author, or editor of ten books, including The Dark Side of Globalization (with
Ramesh Thakur, United Nations University Press, 2010); Which Way Latin
America? Hemispheric Politics Meets Globalization (with Andrew F. Cooper,
United Nations University Press, 2009); and The Last Cacique: Leadership
and Politics in a Puerto Rican City (Pittsburgh University Press, Choice
Magazine Outstanding Academic Book of 1994), and around 70 academic
articles.
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Notes on Contributors xxv
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xxvi Notes on Contributors
Shaw
Notes on Contributors xxvii
Shaw
List of Abbreviations
xxviii
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List of Abbreviations xxix
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xxx List of Abbreviations
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List of Abbreviations xxxi
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xxxii List of Abbreviations
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List of Abbreviations xxxiii
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Introduction
Gordon Mace, Andrew F. Cooper and Timothy M. Shaw
Despite all the attention placed on globalization and its processes, regional
integration mechanisms continue to hold a pivotal position in world affairs.
The global governance structure is marked by a patchwork of authority.
This sense of complex design comes to the fore with respect to the myriad
of regionalization projects currently in existence. Although the debates
surrounding the European approaches and concepts maintain a privileged
position, variants located in other regional projects deserve closer examination.
This requirement is no more apparent than in the Americas where the process
of regionalization has a long history and is currently becoming increasingly
complex, contested and fluid.
In terms of scope, inter-American regional projects are increasingly at
the front lines about the framing of ‘we-ness’ around a distinctive sense
of belonging and identity. This normative turn retains its political edge by
making clear choices about who is in and out in terms of regional actorness.
After all, regions are at their core highly conscious socio-political con-
structs (Breslin and Higgott, 2000). In terms of form, regional projects in
the Americas highlight the contradistinction between formal (de jure) and
informal (de facto) regionalization. The former depends on a heavy degree
of state-driven institutionalization. The latter focuses on the extension of
transnational networks with a concomitant building-up of interactions
either of a corporate or social nature (Hveem, 2008).
In terms of intensity, inter-American regional projects bring out the
contrasts between the familiar and the novel components. Many elements
of the debate about regional cooperation or integration have been in
place for a considerable amount of time, as witnessed by the long debates
about the role of the Organization of American States (OAS) or the pros-
pects of the Free Trade Area of the Americas (FTAA). Other significant
ingredients of the debate, however, have risen fast in recent years as
featured by the emergence of the Alternativa Bolivariana para las Americas
(ALBA; the Bolivarian Alternative for the Americas).
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2 Introduction
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 3
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4 Introduction
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 5
witnessed the failure of all federalist projects from the Republic of Gran
Colombia to the Peruvian–Bolivian Confederation in 1839 (Schneider,
2007, pp. 97–105). The Lima Conference of 1864–5, as Peter Smith aptly
remarks (Smith, 1996, p. 92), was ‘the last institutional embodiment of
Bolivar’s dream’. Thereafter, the flame of political unity was kept alive but
never succeeded in giving birth to a lasting political experiment. After the
Second World War, political unity gave way to economic integration with
projects such as the Latin American Free Trade Association and the Central
American Common Market (CACM), and to multidimensional integra-
tion schemes with the Andean Pact and the Caribbean Community and
Common Market (CARICOM). After years of difficulty and limited progress,
these were replaced by open regionalism projects (ECLAC, 1994), as illus-
trated by the Mercosur (the Southern Common Market) and the Andean
Community. More recently, these economic integration projects have been
complemented by more diplomatic and politically oriented forums such
as the Union of South American States (UNASUR), ALBA, and an eventual
Latin American and Caribbean diplomatic forum – proposed in February
2010 by the Mexican government (Heine, 2010).
With regard to the US-led regionalist project, the intriguing paradox is
that despite all the power and the political weight of the US in the Americas,
Washington was never able to obtain the type of institutional structure that
it wanted. The first window of opportunity was opened in 1889, at the First
International Conference of American States, when the Latin American
governments present rejected the US proposals for a customs union and
an arbitration treaty (Connell-Smith, 1974, p. 110). The following Pan-American
conferences were no more successful at institution building despite the
establishment of the Pan-American Union in 1910. Pan-Americanism can
nevertheless be considered a success for US diplomacy because it prevented
the creation of an exclusive Latin American forum, thereby providing
Washington with more flexibility to intervene in the region.
Another opportunity presented itself, in the aftermath of the Second World
War, in the context of the restructuring of the international system and the
nascent bipolar order. The Ninth International Conference of American
States, held in Bogota in 1948, was the occasion for a transformation of
Pan-Americanism into the Inter-American System. For the US, the Bogota
Conference had mixed results. On the one hand, it reinforced the institu-
tional architecture of hemispheric regionalism with the adoption of the
Charter of Bogota and the establishment of the OAS as the principal political
forum of the inter-American system. This main institutional structure would
be complemented by a defensive military alliance, the Rio Treaty, an important
development tool, the Inter-American Development Bank (IDB), and signifi-
cant democracy and human rights institutions such as the Inter-American
Convention of Human Rights (IACHR), the Inter-American Commission on
Human Rights and the Inter-American Court of Human Rights.
Shaw
6 Introduction
On the other hand, however, the Bogota Conference did not deliver on
US expectations with regard to two important issues. As in 1889, one of
them concerned the settlement of disputes on which most governments
agreed on principle but disagreed on specific provisions to be included in an
agreement. A treaty, the Pact of Bogota, was nevertheless proposed in 1948
and signed by the participating governments. However, it was ratified by only
13 states with, in some cases, far-reaching reservations which considerably
limited its scope. (Connell-Smith, 1974, p. 202; Atkins, 1989, pp. 226–7). The
other issue was that of economic cooperation. The Economic Agreement of
Bogota included a certain number of measures in that regard, particularly
concerning trade in commodities and national treatment of foreign invest-
ment, but the document was signed with so many reservations as to make
it useless even if ratified.
The previous listing, even though incomplete, reveals that there is a
rich history of region building in the Americas unfolding from the days of
independence to the present time. In what concerns the US-led regionalist
project up to the 1980s, the analysis shows that there was an almost constant
tension between the US vision concerning the regional architecture and Latin
America’s reaction to that vision. Given the enormous asymmetry of power
between the US and its neighbours, it was unthinkable for Latin American
governments to openly reject US proposals or confront Washington directly
on issues of particular importance for the region. Consequently, the main
strategy for Latin American governments was a defensive one, based on
the use of law and the construction of a regional law regime. The regime is
based on the fundamental principles of respect for sovereignty and territorial
integrity, and non-intervention. These principles have been put into practice
early in the twentieth century through measures such as the Drago Doctrine
of 1902, on non-intervention, and the Calvo Clause by which foreign investors
in the region renounced the right to appeal to their government in case of
conflict with local governments. They are also affirmed in Articles 15 and
17 of the Bogota Charter.
In this way, Latin American states were not able to prevent unilateral US
interventions in countries of the region but they managed to limit these
interventions to selected countries in Central America and the Caribbean. By
fiercely defending the regional normative order, they succeeded in containing
US power and gave themselves a certain margin for manoeuvre.
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 7
1999, pp. 1–24; Mittelman, 1999, pp. 25–53; Hettne, 2003, pp. 22–42). The
end of the Cold War and the apparent triumph of representative democracy
and of a neoliberal economic order paved the way for a ‘unipolar moment’
(Krauthammer, 1990) in which Latin American and Caribbean (LAC) govern-
ments seemed to have no choice but to harmonize state strategies with
those of the dominant powers, most notably the US.
At the regional level, the context had also changed considerably compared
to the start of the previous decade. Pressure from the international commu-
nity, most notably from the Carter administration, had started to have an
impact in the region at the end of the 1970s with regard to democracy and
respect for human rights. The 1977 decision to reduce aid to countries vio-
lating human rights (Pastor, 2001, p. 46) signalled a change in US policy on
democracy in the Americas. It was a central factor in the re-democratization
movement that started in the region with the return of a civilian govern-
ment in Ecuador in 1979.
The external debt crisis of the mid-1980s was also a very significant
development. A psychological shock, more than anything else, it was at the
source of a major change of attitude on the part of the élites of the region
concerning the economic development model followed by almost all Latin
American governments since the 1930s. Under pressure from international
lending institutions, a majority of governments progressively replaced indus-
trialization by import substitution with state strategies more in line with
the neoliberal economic policies adopted by the US and the UK in the early
1980s and then by most of the OECD countries later on.
Finally, the signing of a free trade agreement between Canada and the US
in 1987 and the start of negotiations between Washington and Mexico two
years later, that would lead to the North American Free Trade Agreement
(NAFTA), were also instrumental in changing perceptions and expectations
of the other governments of the region. The opening of discussions con-
cerning free trade between two industrialized countries and an emergent
economy like Mexico in one way served as an illustration that a free trade
agreement was possible between rich and poor countries in the Americas.
In another way, negotiations on a free trade project in North America
could be perceived as a kind of menace for LAC governments who would
not have had the same kind of access to North American markets. All this
happened while market access to the European Union (EU) was becoming
more difficult.
This particular mix of international and regional occurrences created
a unique context favourable to a rapprochement between the US and its
neighbours of the Americas, which Daniel P. Erikson discusses later in this
volume. This new sense of community and shared interests was based, how-
ever, on false premises and on what was left unsaid. On the one hand, the
US administration developed the unrealistic view that there now existed a
convergence of values and interests between the US and Latin America, and
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8 Introduction
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 9
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10 Introduction
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 11
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12 Introduction
This volume has four parts. In the first one, of a more contextual nature,
we examine the changing political environment in the Americas during
the first decade of the new millennium. Putting to profit her vast expertise
on regional politics, Diana Tussie analyses the shifting grounds of recent
hemispheric and sub-regional relations. She traces the contours of the
trajectory of the hemispheric project, focusing her attention particularly
on the strategic motivations behind the fall of the FTAA project and the
plethora of bilateral trade deals that followed. She then examines the alter-
native forms of region building linked to the complex interplay of the grand
Shaw
Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 13
strategies of Brazil and Venezuela. It is unclear what the future holds for
the ‘circular game of cooperation and competition’ that is now developing
in the Americas, but there is clearly a search for ‘ a new social contract’
and for institutional arrangements that will adequately reflect the new
combination of norms and values. The geopolitical context has changed
considerably in the Americas during the last few years and Brazil will compete
from now on with the US to shape the future agenda and the institutional
architecture of the region.
Follows a contribution from Dan Erickson on the evolving relation-
ship between the US and Latin America under the Obama administration.
After noting that Latin America had all but disappeared from the US foreign
policy agenda after the 9/11 terrorist attacks, Erikson shows how high the
expectations of LAC governments and populations were during the months
leading to the Fifth Summit of the Americas in Trinidad and Tobago in April
of 2009. But US policy towards the Americas cannot change rapidly as it is
shaped by four central factors, among them the uncertainties concerning the
political dynamics in Latin America and the bureaucratic path dependency
of Washington’s policies in the region. The Obama administration is well
aware, however, that the context of inter-American relations has changed in
important ways, one being the increasing presence of external actors, China
in particular. Expectations are that President Obama will progressively try to
recalibrate the US–LAC relationship starting with more attentive manage-
ment of the Brazil–US agenda.
Norman Girvan then uses his long experience as an academic and as a
practitioner to analyse how the Caribbean has been affected by the pro-
found changes in the world economy in recent years and what options
small countries have to adjust to the situation. He first discusses the chal-
lenges associated with the structural shifts that have occurred in the global
economy and the international system. Of significance among them are
the important changes that have characterized the political economy of
Latin America during the last decade, notably the rising opposition to the
Washington Consensus and to the Western models of democracy and develop-
ment, the arrival of new social movements, and the affirmation of the region
on the world scene led by Brazil and Venezuela. The resulting decline of the
US’s influence in the region have left the CARICOM countries with some
options but governments of the region will need to make additional efforts
to define a vision concerning the place of the Caribbean in the new archi-
tecture of the Americas.
Shaw
14 Introduction
thus opens up this section with a study of trade relations in the Americas.
They start with an overview of trade relations in the Americas where one
can see that intra-regional trade in the LAC region is not as significant as
it is in other regions of the world but that it has increased in recent years.
The authors then show how the failure of the FTAA negotiations has left
the region with a patchwork of trade agreements which reveals quite a few
uncertainties concerning the future of regional trade relations. Among four
possible scenarios concerning trade in the Americas, the most advisable
would be a convergence of existing agreements that would prepare the way
for a region-wide agreement. But there are significant hurdles in this case as
in the case of all the scenarios. For Estevadeordal and Suominen, the impor-
tant consideration is to keep trade liberalization going because it offers the
best prospects for prosperity and stability.
From trade, we move to energy cooperation. In his contribution, Tom
O’Keefe writes that despite a proposal made by the Obama administration
to create an Energy and Climate Partnership of the Americas in April 2009,
hemispheric regionalism has a poor track record with regards to energy
cooperation. Energy and sustainable development did figure on the official
agendas of the first three Summits of the Americas, and a Hemispheric
Energy Initiative was officially launched in 1995. But nothing significant
came out of these initiatives, leaving the field open for energy cooperation
at the sub-regional level. All sub-regional integration schemes were active
in proposing agreements and creating institutions to facilitate one form
or another of energy cooperation among member states. In the case of
CARICOM, the PetroCaribe Energy Cooperation Agreements dominate the
landscape and have more or less undermined efforts at energy cooperation
within CARICOM. With regard to energy cooperation at the hemispheric
level, it might be possible to build on existing sub-regional agreements but
the prospects are not good because of Brazilian and Venezuelan reticence
and because of limited US leadership in the region given the importance of
other problems for the Obama administration.
Tom Legler’s contribution highlights the centrality of democracy and
human rights in the hemispheric regionalism project. Starting with the
Protocol of Cartagena de Indias in 1985, member states created a democ-
racy promotion regime that gave the OAS a major role in promoting
democracy and human rights in the region. OAS activities in this sense
have been important, particularly in the field of election monitoring. The
1990s witnessed the development and acceptance by member states of a
democratic normative order in the region whose most salient instrument
is the Inter-American Democratic Charter adopted on 11 September 2001.
Since that year, however, the Charter itself and the democracy regime were
the object of ‘a number of contradictory and worrisome developments’.
The diminishing consensus on what democracy entails have made it dif-
ficult to consolidate the regime. Furthermore, recent events in Honduras
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 15
and Venezuela have shown that there is a need to refine some of its major
instruments.
Security is also an important dimension of inter-American cooperation
as illustrated by Rut Diamint’s chapter. During the Cold War, the main
instrument of hemispheric regionalism for security purposes was the Inter-
American Treaty for Reciprocal Assistance or Rio Pact of 1947. Evoked only a
few times, the Rio Pact is a defensive alliance that was never used for its initial
purpose, which is to protect the member states from external threats. The
end of the Cold War and the appearance of other types of security threats,
such as those related to terrorism and international crime, brought the
hemispheric community to adopt a new security paradigm at the Mexico
Conference on Security in 2003. Building on the new concept of multidi-
mensional security, the OAS enlarged its security mission by incorporating
the Inter-American Defense Board in 2006 and by upgrading the Committee
on Hemispheric Security to a Secretariat on Multidimensional Security.
Combined with that of the defence ministerials, the work of the OAS may
not have reduced insecurity in the region but it did manage to help reduce
tensions among states and it is contributing to the creation of a normative
framework useful in the fight against criminality and terrorism.
The last chapter of the second part of the volume deals with poverty
reduction and the role of regional institutions in this regard, principally the
IDB. Nicola Phillips essentially argues that the poor record of poverty reduc-
tion in the Americas has a lot to do with the problematic conceptual basis
on which the institutions have articulated their strategies. Her analysis of
aggregate figures on poverty in the region brings her to remark that they are
misleading because ‘heavily skewed’ by trends in the larger economies. The
IDB strategies to fight poverty have been handicapped by a conceptual view
focused too much on the national context, thereby obscuring the nature
of the incorporation of LAC economies in global production networks. In
order to have a more effective poverty reduction strategy, the IDB and other
regional institutions should modify their approach to include the dynamics
of ‘adverse incorporation’ into the world economy along with the notion
of social exclusion.
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Gordon Mace, Andrew F. Cooper and Timothy M. Shaw 17
References
Acharya, Amitav and Alastair Iain Johnston (2007), ‘Comparing Regional Institutions:
An Introduction’, in Amitav Acharya and Alastair Iain Johnston (eds), Crafting
Cooperation, Regional International Institutions in Comparative Perspective, Cambridge:
Cambridge University Press. 1–31.
Shaw
18 Introduction
Alexandroff, Alan S. and Andrew F. Cooper (eds) (2010), Rising States, Rising Institutions:
The Challenge of Global Governance, Washington, DC: Brookings Institution Press.
Aronson, Bernard W. (1996), ‘Our Vision of the Hemisphere’, US Department of State
Dispatch, October 15: 184–5.
Atkins, G. Pope (1989), Latin America in the International Political System, second
edition, Boulder: Westview Press.
Breslin, Shaun and Richard Higgott (2000) ‘Studying Regions: Learning from the Old
Constructing the New’, New Political Economy Vol. 5, No. 3, pp. 333–52.
Bush, George H. (1989), ‘Remarks to the Council of the Americas’, Public Papers of the
President of the United States, Vol. 1, Washington, DC: Government Printing Office.
504–7.
Christopher, Warren (1993), ‘A Bridge to a Better Future for the United States and the
Hemisphere’, US Department of State Dispatch, 4(37): 625–6.
Connell-Smith, Gordon (1974), The United States and Latin America: An Historical
Analysis of Inter-American Relations, London: Heinemann Educational Books.
Cooper, Andrew F. (2009), ‘Renewing the OAS’, in Andrew F. Cooper and Jorge Heine
(eds), Which Way Latin America? Hemispheric Politics Meets Globalization, Tokyo:
United Nations University Press. 159–81.
Cooper, Andrew F. and Agata Antkiewicz (eds) (2008) Emerging Powers in Global
Governance: Lessons from the Heiligendamm Process, Waterloo: Wilfrid Laurier
University Press.
Delong, Brad and Stephen S. Cohen (2010), The End of Influence, New York: Basic Books.
Dingwerth, Klaus (2008) ‘Private Transnational Governance and the Developing World:
A Comparative Perspective’ International Studies Quarterly 52(3), September: 607–34.
Dominguez, Jorge I. (2007), ‘International Cooperation in Latin America: The Design
of Regional Institutions by Slow Accretion’, in Amitav Acharya and Alastair Iain
Johnston (eds), Crafting Cooperation: Regional International Institutions in Comparative
Perspective, Cambridge: Cambridge University Press. 83–128.
ECLAC (Economic Commission for Latin America and the Caribbean) (1994), Open
Regionalism in Latin America and the Caribbean, Santiago: ECLAC.
Feinberg, Richard E. and Paul Haslam (2007), ‘Problems of Coordination: The OAS and
the IDB’, in Gordon Mace, Jean-Philippe Thérien and Paul Haslam (eds), Governing the
Americas: Assessing Multilateral Institutions, Boulder: Lynne Rienner Publishers. 51–68.
Goldman Sachs (2007) BRICs & Beyond, New York: Goldman Sachs Group. Available at
http://www2.goldmansachs.com/ideas/brics/book/BRIC-Full.pdf.
Goldstein, Andrea (2007), Multinational Companies from Emerging Economies, London:
Palgrave Macmillan.
Gosselin, Guy and Jean-Philippe Thérien (1999), ‘The Organization of American
States and Hemispheric Regionalism’, in Gordon Mace, Louis Bélanger and con-
tributors, The Americas in Transition: The Contours of Regionalism, Boulder: Lynne
Rienner Publishers: 175–93.
Heine, Jorge (2010), ‘Latin Craze for Regional Integration’, The Toronto Star, 28 February.
Available at http://www.thestar.com/printarticle/772318. Accessed 2 March 2010.
Hettne, Bjorn (1999), ‘Globalization and the New Regionalism: The Second Great Trans-
formation’, in Bjorn Hettne, Andras Inotai and Osvaldo Sunkel (eds), Globalism and
the New Regionalism, London: Macmillan. 1–24.
Hettne, Bjorn (2003), ‘The New Regionalism Revisited’, in Fredrik Soderbaum and Timothy
M. Shaw (eds), Theories of New Regionalism, Basingstoke: Palgrave Macmillan. 22–42.
Hochstetler, Kathryn & Margaret E. Keck (2007), Greening Brazil: Environmental
Activism in State & Society, Durham: Duke University Press.
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Part I
A Changing Landscape
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1
Hemispheric Relations: Budding
Contests in the Dawn of a New Era
Diana Tussie
Introduction
In the 1960s, when region building was first having a renaissance, economist
Gunnar Myrdal (1968: 39) issued a cautious note, suggesting that ‘the
regional approach has no intrinsic justification. There are no mystical qualities
in geographical proximity that make neighboring nations a “unit” in any
real sense culturally, politically or economically’. True to this dictum, Latin
America is a vast and uneven continent of many contrasts that escapes
‘essentialist’ characterizations, such as language, Hispanic-Catholic traditions
or a single civilization, as Huntington (1998) would have it. In the region,
the differences in size and levels of development are several times larger
than those found between the actual and prospective members of the
European Union. But such contrasts still leave room for positive assertions
about shared trends, common dilemmas or recurrent policy features that
prompt region-building efforts.
The regional level of analysis adds an exciting dimension to the study of
international political economy, long over-focused upon advanced industrial
societies and states as the systemic rule makers par excellence. European
empires enshrined this balance of power and the US, and through the
Monroe doctrine, promoted templates for controlling (and understanding)
their respective regions; most other countries also built ways of dealing
with their neighbours that have been overlooked by the systemic view of
enquiry. It is not that regions have been ignored outright, but rather that
only certain regions were deemed of interest: those seen to shape global
rules. The others were bundled up at the receiving end.
In a period of rapid transformation, the cloth of regional policies, regional
identities and regional forms of cooperation and competition (and not just
in ‘core’ regions) have come into focus as they are seen to have significant
global reverberations (Bélanger and Mace, 1999), beyond the role of pas-
sive receivers. Sticking to a binary view, Robert Keohane (2001) sets Latin
American countries as the takers not makers of global rules. Going beyond
23
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Diana Tussie 25
Reigning supreme
When the Cold War came to an end, Latin America stood alone as the only
region where American influence remained largely uncontested (Castañeda,
1993). This provided an opportunity for the most encompassing US attempt
to establish a model of regional economic governance through the Free
Trade Area of the Americas (FTAA). The relevance of the FTAA stemmed not
only from issues of regional market access for trade and investment but also
as a broader set of global power issues. The idea of creating a single market
with the 34 countries of the Americas was predicated on consolidating the
hegemony of US multinationals and structural adjustment policies – that
is, neoliberalism – until they became practically irreversible. This, in turn,
would be a major step towards establishing US hegemony over the inter-
national system, as the country’s net was cast over more and more countries
to bring them into the spiral of expanding agreements.
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26 Hemispheric Relations
The effort to join the economies of the Americas into a single free
trade area began at the First Summit of the Americas held in Miami, US
in December 1994. The initiative was warmly received by Latin American
heads of government, at a time when the Washington Consensus was the
dominant mindset. Countries in the region were leaving behind the worst
excesses of authoritarianism, regulation and protectionism. When the heads
of state signed the 1994 Miami Declaration and Plan of Action, there was
a consensus accepting of American leadership in the post-Cold War world
and in favour of de-regulation and trade liberalization. The 34 countries of
the Americas agreed to complete negotiations towards this agreement by the
year 2005. During the preparatory phase (1994–8), the 34 ministers respon-
sible for trade established 12 working groups to identify and examine existing
trade-related measures in each area, with a view to identifying possible
approaches to negotiations. The FTAA negotiations were formally launched
in April 1998 at the Second Summit of the Americas in Santiago, Chile. The
heads of state declared that the negotiating process would take into account
the differences in the levels of development and size of the economies in the
Americas in order to facilitate full participation by all countries and to ensure
that existing sub-regional schemes would not be wiped away. Consequently,
much of the literature explains open regionalism as a project of governments
responding to the needs of corporate actors to improve competitiveness in
global markets, using regional action as a means to engage with the global
economy (Grugel and Hout, 1999; Hveem, 2008; Mittelman, 2000). These
projects are likely to include a strong neoliberal agenda requiring extensive
domestic deregulation, apart from trade liberalization, aimed at reducing
the state’s role in economic life in order to yield efficiency gains (Phillips,
2000). The effect of such actions is to markedly reduce transaction costs for
firms engaged in business across national borders. Open regionalism and
neoliberal regionalism are often regarded as synonymous in the literature
(see Mittelman, 2000); in Latin America it was intimately connected to the
attempt to replace import substitution, countenance the FTAA and its sub-
sequent fallback option, that is, the web of bilateral agreements connected
to the US hub that replaced the original blueprint.
The establishment of the North American Free Trade Area (NAFTA) was a
watershed: it triggered panicked reactions in a spate of excluded countries.
North–South agreements modelled on NAFTA were put on offer and for many
countries that had been silent bystanders in the General Agreement on Tariffs
and Trade (GATT), regional arrangements of the North–South variety provided
an opportunity to increase inward investment and gain the market access
they sought but had never really extracted from multilateral negotiations.
In this context, the US tried to achieve WTO-plus agreements that would allow
for a favourable position not only in the hemisphere and with other countries
from other parts of the world. Unable to ignore these forces, governments,
businesses and other social groups responded with a variety of tactics.
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32 Hemispheric Relations
the FTAA and subsequently the first overtures for bilateral pacts.4 Many
Brazilian social, political and economic actors perceived that Washington
used the FTAA to undermine strides in sub-regional integration and align
the hemisphere to its interests. Other countries dependent on the US market
were more willing to undertake policy reforms as a quid pro quo for preferen-
tial access for their exports. As the continent split on the costs and benefits
of the package on offer, bilateral agreements netted a coalition compris-
ing Chile, Colombia, Peru and Central America. North America and
Mercosur became contending hubs for the emerging patterns of integra-
tion. Gradually a degree of creativity and flexibility in setting the regional
agenda emerged in the interstices. While opposition to neoliberalism
gathered strength, the string of globalization crises in the region (Mexico
in 1995, Brazil in 1999, Argentina in 2001) forced a reality check, damaged
confidence in neoliberal reform and changed the mindset of élites. US
unilateral policy in the era of George W. Bush, its lack of strategic vision –
even negligence and divisiveness in its dealings with Latin America – was
to be the handmaiden that provided the occasion for a turnaround of
the entanglement that had marked the 1990s. George W. Bush came to
personify the threat that acquiescence to American power could get out
of control. His contribution to contesting politics should not be judged
by its own tragic global outcomes but by the strong counter-reactions it
provoked. It is out of such dynamics that in Latin America regionalism
emerges as a defensive response.
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38 Hemispheric Relations
Was Myrdal right in claiming that there are no mystical qualities in geo-
graphical proximity that make neighbouring nations a ‘unit’ in any real
cultural, political or economical sense? The answer depends on the degree
of uniformity required to qualify as a unit.
What we now see in this particular region are the trappings of a complex
competition over rules as well as economic and social values. While Central
America, Chile, Peru, Colombia and Mexico find value in the US market,
other governments are more challenging in a variety of ways, deriving
political legitimacy from their capacity to preserve the region as a space
for normative niches. What we now see is a circular game of cooperation
and competition through regional structures and arrangements, each one
attempting to offset the other and gain extra-regional credentials. A lesson
stemming from Europe is that regional integration projects often need
large member states with technocratically capable cadres in order to provide
vision and leadership for the rest of the group. France and Germany have
played this role in the European Economic Community and its antecedents
from the 1950s, and Singapore and Thailand seem to aspire to a similar
partnering role in ASEAN (Dent, 2006).
Venezuela and Brazil compete for that role on different grounds and
with different styles, making the institutionalization of new projects far
from stable. Yet the dimensions of the competition should not be exagger-
ated. In their mutual dealings, both avoid direct confrontation and have
even searched for spaces of cooperation. The joint venture between the
Venezuelan and Brazilian oil companies in petrochemicals is a case in point
as is Brazilian provision of arms to Venezuela. Brazil and the ALBA govern-
ments have maintained close and friendly relations.7 While President Lula
has at times gone out of his way to praise Chávez, he has also been very
effective in moderating the latter’s propensity for conflict and containing
his more extreme international gambits, such as his enthusiastic support
for Colombia’s FARC guerrillas. Yet if war ultimately breaks out between
Colombia and Venezuela, Brazil will be forced to walk a fine line in its tra-
ditional, nuanced and conciliatory approach to regional diplomacy; so far
it is quite averse to taking an overtly confrontational approach vis-á-vis the
US, but strongly averse to being viewed as its pawn.
Today, Brazil can be seen in the league of conciliatory-style-alternative-
globalizers. It has become more outward-looking from the diplomatic and
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40 Hemispheric Relations
members of the UN Security Council will be, how the shares and voting
structures in international financial institutions change and what the structures
might be of new organizations such as the G20. Indeed, crafting and insti-
tutionalizing a new global leadership role for Brazil is an accepted objective
of the government and a key goal – perhaps the most important goal – for
Minister Celso Amorim. In the field of finance, it has turned lender to the
International Monetary Fund (IMF), joining India, China and Russia in
October 2009 in the purchase of bonds worth US$ 10 billion to boost the
Fund’s resources. All these moves show that Brazil no longer wants to be
viewed simply as the largest country in Latin America, and considers itself
to be in a different league. While this process does not imply the wholesale
elimination of forms of governance that engage the US, such as the OAS
or the circle of bilateral trade agreements with the US, all actors look like
wrestlers attentively circling one another in a continuous process – each
intensifying their bilateral relations, none wanting full disruption, failure
or long-standing deadlock. Regional building has turned into a complex,
multilayered arena where contending political enterprises compete, a far cry
from a crystallized and conceptually neat project in the hands of a single
uncontested leader.
No mystical qualities exist, but this is still a region with a discernible
identity that is intensely interlaced and unprecedentedly projected out-
wards in multiple directions.
Notes
1. At the time of writing, Colombia announced that it was preparing a strategy to
ward off a Venezuelan attack while President Chavez called Colombia’s govern-
ment a declared enemy of Venezuela (see La Nacion, 2009).
2. I owe the term to my colleague Maria Pia Riggirozzi. It refers to the host of coun-
tries, such as China, India, Venezuela and Brazil gradually trying to carve spaces
for themselves in the global (and regional) scene.
3. Ken Shadlen (2008) shows the disproportionate influence of these export lobbies
in trade-dependent countries.
4. Uruguay signed a bilateral investment treaty with the US which, though causing
ripples of discontent within the governing party as well as with its regional partners,
did not actually violate the core of Mercosur commitments.
5. To put this move into perspective see Baldwin (2006). The process is equivalent to
the configuration of the European Free Trade Area following the creation of the
European Economic Community and the domino effect triggered when Britain
changed camps in the 1970s. Ireland, Norway and Denmark, nations that had seen
fit to stay out of the EEC in 1957, all put in applications soon after Britain.
6. The election that led Lugo to victory in April 2008 in Paraguay broke the 60-year
authoritarian stronghold of the conservative Colorado Party.
7. The exception to the trend is the bone of contention between Bolivia and Brazil
over oil and gas investments. Hitting the raw nerve of bilateral relations, Petrobras is
the largest investor in Brazilian oil and gas, supplying gas to Brazilians at extremely
low prices. The production of Petrobras in Bolivia is equivalent to 15 per cent of
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Diana Tussie 41
Bolivian GDP; its tax contributions add up to 20 per cent of overall collections. Yet
in 2008, when the Eastern Bolivian provinces instigated a civic coup, Brazil threw its
support behind Evo Morales and the continuation of the rule of law.
References
Bélanger, Louis and Gordon Mace (1999), ‘Building Role and Region: Middle States
and Regionalism in the Americas’, in L. Bélanger and G. Mace (eds), The Americas In
Transition: The Contours of Regionalism, Boulder, CO: Lynne Rienner.
Bergsten, C. Fred (1996) ‘Competitive Liberalization and Global Free Trade: A Vision for the
Early 21st Century’, Peterson Institute for International Economics, Working Paper No.
96–15. Available at http://www.iie.com/publications/wp/wp.cfm?ResearchID=171.
Blanco, Ronald and Rosalba Linares (2008) ‘Chávez en la política exterior venezolana:
ALCA versus ALBA, de la democracia representativa a participativa’ in Aldea Mundo,
Año 13, Numero 26, julio-diciembre.
Carranza , Mario (2006) ‘Clinging Together: Mercosur’s Ambitious External Agenda, its
Internal Crisis and the Future of Regional Economic Integration in South America’,
Review of International Political Economy, Vol. 13, No. 5, December.
Castañeda, Jorge G. (1993) ‘Can NAFTA change Mexico?’ Foreign Affairs, September/
October.
Cooper, Andrew F. and Jorge Heine (eds) (2009) Which Way Latin America? Hemispheric
Politics Meets Globalization, Tokyo: United Nations University Press.
Dent, Christopher (2006) ‘Free Trade Agreements in the Asia-Pacific: Convergence or
Divergence?’ LATN Working Paper No. 62.
Evenett, Simon and Michael Meier (2007) ‘An Interim Assessment of US Trade Policy
of “Competitive Liberalization”’, University of St. Gallen Economics Discussion Paper,
No. 2007–18, February.
Fawcett, Louise (2005) ‘The Origins of the Regional Idea in the Americas’, in L.
Fawcett and Mónica Serrano (eds), Regionalism and Governance in the Americas,
London: Palgrave Macmillan.
Grugel, Jean and Wil Hout (1999) ‘Regions, Regionalism and the South’, in J. Grugel
and W. Hout(eds), Regionalism Across the North-South Divide: State Strategies and
Globalisation, London: Routledge.
Heidrich, Pablo and Diana Tussie (2008) ‘Post-Neoliberalism and the New Left in
the Americas: The Pathways of Economic and Trade Policies’ in Laura MacDonald
and Arne Ruckert (eds), Post Neoliberalism in the Americas, London: Palgrave
Macmillan.
Huntington, Samuel P. (1998) The Clash of Civilizations and the Remaking of the World
Order, New York: Simon & Schuster.
Hveem, Helge (2000) ‘Explaining the Regional Phenomenon in an Era of Globalisation’,
in Richard Stubbs and Geoffrey R. D. Underhill (eds), Political Economy and the
Changing Global Order, Oxford: Oxford University Press.
Keohane, Robert (2001) ‘Between Vision and Reality: Variables in Latin American
Foreign Policy’, in Joseph Tulchin and Robert Espach (eds), Latin America in the New
International System, Boulder, CO: Lynne Rienner,
La Nacion (2009) ‘Chavez advierte a Colombia que derribará aviones’, 20 December.
Mittelman, James H. (2000) The Globalisation Syndrome: Transformation and Resistance,
Princeton, NJ: Princeton University Press.
Myrdal, Gunnar (1968) Asian Drama: An Enquiry into the Poverty of Regions, Volume 1,
New York: Pantheon.
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42 Hemispheric Relations
Palan, Ronen P. and Jason Abbott, Phil Deans (1996) State Strategies in the Global
Political Economy, London: Pinter.
Phillips, Nicola (2009) ‘Coping with China’, in Andrew F. Cooper and Jorge Heine
(eds), Which Way Latin America? Hemispheric Politics Meets Globalization, Tokyo:
United Nations University Press.
Phillips, Nicola (2000) ‘Governance After Financial Crisis: South American Perspectives
on the Reformulation of Regionalism’, New Political Economy, Vol. 5, No. 3.
Saguier, Marcelo (2007) ‘The Hemispheric Social Alliance and the Free Trade Area
of the Americas Process: The Challenges and Opportunities of Transnational
Coalitions against Neo-liberalism’, Globalizations, Vol. 4, No. 2. Available at http://
dx.doi.org/10.1080/14747730701345267
Shadlen, Ken (2008) ‘Globalization, Power and Economic Integration in the
Americas in Diego Sánchez-Ancochea and Kenneth C. Shadlen (eds), Responding
to Globalization: The Political Economy of Hemispheric Integration in the Americas,
Basingstoke, Hampshire: Palgrave Macmillan.
The Economist (2002) ‘Unleashing the Trade Winds’, December 7–13.
Tussie, Diana and Cintia Quiliconi (2004) ‘Market Access as a Substitute for
Development? North-South Regionalism in Latin America’, Commissioned Paper for
2005 Human Development Report, December.
Van Grasstek, Craig (2008) ‘What is the FTAA’s Role in the USA’s Global Strategy?’
Capítulos del SELA 54.
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2
The Obama Administration and Latin
America: Towards a New Partnership?
Daniel P. Erikson*
The election of Barack Hussein Obama as the 44th president of the United
States was widely hailed at home and abroad as a pivotal and potentially
epoch-making event. In a remarkably short time, Obama moved from a
rising star of the Democratic Party to a formidable presidential candidate to
become the first black president of the US. The world celebrated Obama’s
election as an example of the American possibility of renewal and a welcome
shift from the perception of strident unilateralism that had dogged President
George W. Bush – even after his policies took a more moderate and multi-
lateral turn during his second term in office. Virtually every major world
region expected its relations with the US to be substantially altered (and
mostly improved) by a new American president with a decidedly more
cooperative and multilateral approach to foreign policy.
Latin America and the Caribbean were no exception. The 33 developing
countries of the Western Hemisphere broadly welcomed Obama’s elec-
tion to the White House. Indeed, in no part of the world outside Africa
did the election of a black US president have greater symbolic value. Latin
America, with its history of slavery and racism, is home to a large African
diaspora. As many as one-third of the region’s 550 million inhabitants are
of African descent, including a large fraction of the population in Brazil,
the vast majority of the Caribbean and smaller communities throughout
the Andes and Central America. Coupled with the fact that Latin American
countries generally prefer Democratic presidents, for reasons that have as
much to do with unpleasant Cold War memories of Nixon and Reagan as
any specific policy agenda, Obama’s emergence was a welcome event. In a
BBC poll which included surveys of opinion in Brazil, Mexico, and Panama,
respondents heavily favoured Obama over his Republican opponent John
* Daniel P. Erikson wrote this chapter in his capacity as senior associate for US policy
at the Inter-American Dialogue, prior to his appointment to the State Department’s
Bureau of Western Hemisphere Affairs. Therefore, this chapter is based on his inde-
pendent analysis and does not necessarily reflect the views of the US government.
43
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44 The Obama Administration and Latin America
McCain, and about half thought that their nation’s relations with the
US would improve as a result of his election. (Canadians, uncharacteristi-
cally, were even more optimistic.) About 60 per cent of Mexicans added
that it would fundamentally change their view of the US, and slightly
fewer than half of Panamanians and about one-third of Brazilians agreed
(BBC World Service, 2008).
While virtually all the presidents of Latin America and the Caribbean
hailed Obama’s election, specific responses reflected the idiosyncrasies of
each country – perhaps nowhere more so than Brazil, where six candidates
in municipal elections legally changed their names to either Barack or
Obama in an attempt to capitalize on the local popularity of the American
candidate. Brazil’s President Luiz Inácio Lula da Silva (quoted in Foley,
2009), a leftist who had burnished his credentials as a pragmatist by cosying
up to the Bush administration, placed Obama’s election in a regional con-
text, saying, ‘In the same way that Brazil elected a metalworker, Bolivia an
Indian, Venezuela a Chávez, and Paraguay a bishop, I believe it will be an
extraordinary thing if in the biggest economy in the world a black is elected
president’. Brazil’s Foreign Minister Celso Amorim chimed in that ‘We aren’t
going to deny that the Brazilian government had a good, pragmatic relation-
ship with the Bush government, but now the relationship can be refined,
and we hope to establish a relationship of partners with the new US govern-
ment’ (quoted in Erikson, 2008). Lula later proposed two policy changes
for Obama to implement: an end to US agricultural subsidies and the repeal
of the US embargo of Cuba. Mexico’s President Felipe Calderon spoke to
Obama about the challenge of fighting organized crime and drug trafficking,
an issue also emphasized by Colombia’s President Álvaro Uribe along with
urging passage of the controversial Colombia Free Trade Agreement then
awaiting a vote in the US Congress.
Venezuela’s President Hugo Chávez said of Obama, ‘We don’t ask him to
be a revolutionary, nor a socialist, but that he rise to the moment in the
world’, adding, ‘we hope the next government will end that savage embargo
and aggression against Cuba’ (The Telegraph, 2008). In a column in the
Cuban government newspaper Granma, Fidel Castro – the ailing 82-year-old
ex-president of Cuba – expressed relief that the US had not elected John
McCain, whom he described as ‘old, bellicose, uncultured, not very intelli-
gent, and not in good health’ – proving yet again that the grizzled Cuban
leader did not subscribe to the notion that those in glass houses should not
throw stones. Castro praised Obama as ‘more intelligent, educated and level-
headed’, but fretted that ‘concerns over the world’s pressing problems really
do not occupy an important place in Obama’s mind’. Another commentary
in Granma described Obama’s victory as ‘surprising and meteoric’, which the
author credited in part to McCain’s fateful decision to select as his running
mate ‘the Arctic Amazon of Alaska, Sarah Palin’ (Montoto, 2008). But it was
Prime Minister Baldwin Spencer of the tiny twin-island nation of Antigua
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Daniel P. Erikson 45
and Barbuda who made the grandest gesture. He promptly wrote a letter
of congratulation to the US president-elect in which he declared that his
country’s tallest mountain, the 1319ft high Boggy Peak, would be henceforth
known as Mount Obama (Kentish, 2009).
All this hoopla caused even hardened sceptics to wonder if Barack Obama
could revive the flagging relationship between the US and Latin America
following the disenchantment of the Bush years. To some degree, enthusiasm
for Latin America is cyclical, as newly elected US presidents frequently
promise to reinvigorate ties with America’s neighbours to the south. Some
have made efforts in good faith: Bill Clinton, for example, helped secure
enactment of the North American Free Trade Agreement (NAFTA) in 1993,
restored Haiti’s ousted President Jean-Bertrand Aristide to power, and con-
vened the First Summit of the Americas in 1994. Clinton later became
so preoccupied with the conflict in the former Yugoslavia and then his
impeachment scandal at home that, with the exception of the drug war in
Colombia, Latin America largely fell from the agenda.
George W. Bush invited the then Mexican president, Vicente Fox, as the
first guest at a White House state dinner in early September 2001, where
he declared that the US ‘has no more important relationship in the world
than the one we have with Mexico’. The 9/11 terrorist attacks occurred the
following week, and Mexico, along with the rest of Latin America, virtually
disappeared from the US foreign policy agenda for the rest of Bush’s first
term, except for the effort to negotiate a range of bilateral FTAs with regional
allies. It could be argued that, no matter where an American president’s
foreign policy eventually ends up, an early emphasis is often placed on
Latin America; history demonstrates, however, that US policy towards Latin
America does not change quickly, especially during the first year of a new
American presidency.
The Obama administration’s Latin America policy has been shaped by
four important factors. The first was the broader foreign policy environ-
ment facing the US government as well as the overall trajectory and scope
of Obama’s global engagement. Given that the top three priorities of the
Obama administration were the wars in Afghanistan and Iraq and the reper-
cussions of the financial and economic crisis that the White House inherited,
Latin America was generally relegated to a lower priority, as reflected in a
limited number of new initiatives, and the slow and uneven pace of staffing
key governmental positions. Still, Obama recast US international relations
from the Manichean ‘with us or against us’ approach favoured by the Bush
administration to a style that embraced global engagement and direct
diplomacy. The Western Hemisphere was not the primary focus of US out-
reach, but nevertheless it experienced the positive reverberations, whether
Shaw
46 The Obama Administration and Latin America
it meant: the more frequent meetings with G20 countries like Argentina,
Brazil, Canada, and Mexico; the cautious diplomatic openings to Cuba and
Venezuela; or the efforts to back a Latin America-led solution to the political
crisis in Honduras that was precipitated by the ousting of President José
Manuel Zelaya in June 2009.
The second factor was the political and bureaucratic momentum that
drives forward a number of US policies in Latin America, some of which
date back decades while others were created under the Bush administration.
While Obama softened the edges of longstanding policies like the US
embargo of Cuba and the ‘war on drugs’, his administration demonstrated
little enthusiasm for seriously rethinking or reversing these efforts despite
the tensions that these policies produced in the region (see Latin American
Commission on Drugs and Democracy, 2009; Reuter, 2008). The same
was true for a number of more promising Bush-era initiatives, such as the
Merida Initiative (to provide police and military support to the Mexican
government as it battles drug traffickers along its northern borders), and
the expansion of the nearly decade-old effort to help the Colombian govern-
ment establish internal security and dismantle guerrilla groups. In May
2009, the Obama administration requested US$ 1.4 billion to expand
the Millennium Challenge Corporation, a US aid effort created by Bush
officials to reward high-performing governments in poor countries world-
wide, with major poverty-reduction compacts already active in El Salvador,
Honduras, and Nicaragua, and threshold programmes established for
Guyana, Paraguay, and Peru.
Third, the Obama administration, like most of its predecessors, exercised
caution in dealing with high-cost, low-reward policy issues such as immigra-
tion reform, new trade deals, and Cuba. Serious negotiations with the US
Congress over immigration reform were postponed until after the passage
of health care reform, which absorbed an enormous amount of political
effort. While the Obama administration quickly backpedalled from its cam-
paign promise to ‘renegotiate NAFTA’, it has nevertheless shied away from
bucking the strong anti-trade tendencies that dominate the Democratic
Party. Significant trade agreements that the Bush administration negotiated
with Colombia and Panama were left in limbo as a result, and the plans
for the US-backed Free Trade Area of the Americas (FTAA) have essentially
been consigned to purgatory following the breakdown in negotiations that
occurred during Bush’s second term (see Shifter, 2009). A widely acknowl-
edged need to overhaul Cuba policy was muted by concerns about provoking
the ire of strongly pro-embargo Cuban exile legislators in the House of
Representatives and Senate, even though a sea change in the sentiments
of the broader Cuban American community initially seemed to encourage a
broader opening.
Lastly, emerging political trends in Latin America have raised new questions
about how the US should define its relationship with the countries to its
Shaw
Daniel P. Erikson 47
south at a time when they are exhibiting a greater level of assertiveness (see
Cooper and Heine, 2009). This independent streak is increasingly apparent
throughout South America. During the Lula presidency, Brazil has strength-
ened its role as a continental leader and achieved new political heft on the
world stage. The decision by the International Olympic Committee to award
the 2016 games to Brazil, bypassing Obama’s hometown Chicago, marks
the first time that a South American country has been chosen to host the
Olympics, and represents a major symbolic milestone in Brazil’s rise, much
as the 2008 games in Beijing served that purpose for China. Assuming that
he remains in office despite the rapidly deteriorating economy, Venezuela’s
Hugo Chávez has positioned himself as the regional provocateur and principal
adversary of American dominance in the Western Hemisphere. Leaders in
Ecuador, Bolivia, and Argentina have taken steps to distance themselves
from the US, while Chile and Peru have become more focused on trade
ties with the Asia-Pacific region. Colombia, notwithstanding its reliance
on US military aid, is irritated that its free trade deal with the US remains
indefinitely stalled pending a Congressional vote in Washington. In Mexico,
Central America, and the Caribbean, the region’s economic interconnected-
ness with the US has persisted as the dominant fact of its politics. Mexico’s
President Felipe Calderon pledged to work closely with the US to solve the
problem of drug-related insecurity along the border. Still, all countries are
experiencing a diversification of political relationships, and the Caribbean is
looking increasingly to China (see Phillips, 2009) and Venezuela (see Legler,
2009) as major partners.
The US has long been wary of foreign powers meddling in the Western
Hemisphere for reasons both real and imagined. In recent years, Latin
America’s increasingly diverse international relations have stoked these fears
anew, as the US has witnessed the region draw closer to global rivals just as
American influence is facing unprecedented challenges. The warm embrace
that Iran’s President Mahmoud Ahmadinejad received from Venezuela’s
President Hugo Chávez and, more recently, Brazil’s President Lula, provides
the most dramatic example of a new trend that has seen Latin America
and the Caribbean seek greater independence from the US while deepening
ties with such emerging powers outside the hemisphere as China, India, and
Russia. To be sure, many US policymakers intellectually understand that this
increasingly complex mosaic of international relations is the product of a
more globalized world. Still, there is an underlying current of unease that
American primacy in the Western Hemisphere is being threatened in subtle
but important ways.
Of course, there has long been a precept in US foreign policy that was
developed to address precisely this problem. It is called the Monroe Doctrine,
Shaw
48 The Obama Administration and Latin America
after its creator President James Monroe, and it represents the iconic assertion
of the US’s right to oppose foreign powers in the Western Hemisphere.
Today, the realities that were the foundation for the Monroe Doctrine have
fundamentally changed, but the US has been slow to adjust its attitudes
and mindset accordingly. In order to be effective in Latin America, the
Obama administration recognizes that it must adapt to an increasingly
globalized era in inter-American relations. As a result, the US has attempted
to forge a middle path between counterproductive efforts to isolate coun-
tries with which it has difficult relations and efforts to engage Latin America’s
rising powers that show little interest in reciprocating American goodwill.
In May 2009, US Secretary of State Hillary Clinton, speaking at a public
forum in Washington, DC, was asked how the US should manage the chal-
lenges posed by Hugo Chávez, the Venezuelan leader who has positioned
himself as the chief opponent of American power in Latin America. Secretary
Clinton (2009) used the opportunity to rebut the George W. Bush admin-
istration’s record in dealing with leftist leaders in the hemisphere, saying
that ‘the prior administration tried to isolate them. … It didn’t work’. She
continued:
I have to say that I don’t think in today’s world, where it’s a multipolar
world, where we are competing for attention and relationships with at
least the Russians, the Chinese, the Iranians, that it’s in our interest to
turn our backs on countries in our own hemisphere.
Clinton also stated that the new engagement between extra hemispheric
actors and certain Latin American countries is ‘quite disturbing’ (Clinton,
2009).
Secretary Clinton is hardly the first US public official to cast China’s
growing presence in Latin America as a sign that the US should deepen its
own engagement in the region. During the 2008 US presidential campaign,
China’s growing influence in Latin America was portrayed as a symptom
of the perceived neglect of the region by the Bush administration. In his
first debate with Republican candidate John McCain, Obama highlighted
China’s role as a potential challenge:
We’ve got challenges, for example, with China, where we are borrowing
billions of dollars. They now hold a trillion dollars’ worth of our debt.
And they are active … in regions like Latin America, and Asia, and Africa.
The conspicuousness of their presence is only matched by our absence,
because we’ve been focused on Iraq.
(New York Times, 2009).
Shaw
Daniel P. Erikson 49
Shaw
50 The Obama Administration and Latin America
US policy challenges
Since his election in 1998, Hugo Chávez is the political leader who has posed
the most severe test to US power from within Latin America. Chávez has both
rejected the US’s historical leadership role (which he terms ‘imperialism’), and
strived to create a network of alliances and institutions independent of US
influence. He sought to replace the International Monetary Fund (IMF) and
the World Bank with the Latin America-dominated Banco del Sur, exchange the
FTAA with a social trade pact known as the Bolivarian Alternative for Latin
America (ALBA), and funded a new Spanish-language news station, Telesur,
as an alternative to US media sources. Chávez has won a limited following
for these ideas in the region, and the passage of a recent Venezuelan refer-
endum rescinding term limits has paved the way for him to seek another
term in January 2013.
Brazil, with the world’s fifth largest population and tenth largest economy,
is similarly interested in a realignment of global power that recognizes its
political and economic heft. Unlike Venezuela, however, it has been careful
to ensure that its pursuit of this goal does not veer into open conflict with
the US. Indeed, Brazil’s President Lula enjoyed one of the warmest relation-
ships with President Bush of any Latin American leader, and the personal
rapport between Obama and Lula has been even warmer (see Marinis, 2010).
Still, Brazilian opposition to the FTAA helped fuel its demise in 2005, and
the country has clashed with the US in world trade talks as a leader of the
G77 group of developing countries that includes China, India, and South
Africa. Brazil’s aggressive bid to win a permanent seat on the UN Security
Council has led Lula on a global tour to garner support for the country’s
global aspirations. Brazilian diplomacy has focused on positioning Brazil as
a leader in world affairs ready to hold the US at arm’s length when necessary
(see Simpson, 2010).
The need to manage the increasingly complex relationship with South
American countries will be a critical US policy priority. The early effort
to enhance the US–Brazil agenda was especially vital, because strong
US–Brazilian ties could help the Obama administration handle festering ten-
sions in countries including Colombia, Venezuela, and Bolivia. However,
such an outcome may be overly optimistic, given that Brazil and the US
soon diverged in their responses to the coup against President José Manuel
Zelaya in Honduras, where initial unity in opposing the constitutional breach
quickly gave way to divisions over whether the international community
should recognize the Honduran elections scheduled for November 2009 in
the absence of Zelaya’s restoration (see Sheridan, 2009). The US provided
its tacit support to the elections while Brazil, whose embassy in Tegucigalpa
provided Zelaya sanctuary, disagreed. The Honduran episode illustrates the
degree to which Brazil’s rise has made the complexity of this relationship
more difficult for the Obama administration to navigate. This new dynamic
was also evident in summer 2009, when news emerged that the US had
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Daniel P. Erikson 51
Shaw
52 The Obama Administration and Latin America
spent, because much of the programme remained mired in red tape and
governmental bureaucracy (Sherman, 2009). Meanwhile, perhaps the most
important issue to Mexico – meaningful immigration reform in the US – was
postponed as the US Congress focused on more pressing domestic concerns
like job creation and health care reform.
Moving forward, two potential flashpoints in the Caribbean pose further
worrying challenges. The lacklustre rule of Raúl Castro and the worsening
economic situation in Cuba have undercut early hopes that the island would
adopt a path of reform following Fidel Castro’s retirement. Nonetheless,
Obama has implemented new travel rules for Cuban Americans and
favoured direct bilateral negotiations on issues of mutual concern, such as
migration and establishing a direct postal service. Haiti, for its part, remains
fragile and poses an ongoing source of humanitarian disaster that needs to
be part of the regional agenda. In January 2010, Haiti was struck by a power-
ful earthquake that devastated the capital city of Port-au-Prince and resulted
in more than 200,000 casualties. The US led in delivering humanitarian
relief immediately after the quake, as well as granting Temporary Protected
Status to Haitian migrants, and made available hundreds of millions of dollars
in aid while promising to deepen that investment in the months and years
ahead (Silva, 2010).
Honduras, as referenced above, emerged as an unexpected flashpoint
in US–Latin American relations in June 2009 when its democratically
elected president, José Manuel Zelaya, was deposed in a coup. The Honduran
military awoke President Zelaya early in the morning and deposited him in
neighbouring Costa Rica while still dressed in his pyjamas (Malkin, 2009).
The resulting outcry against the newly appointed interim government of
Roberto Micheletti prompted a months-long standoff between the de facto
Honduran regime and the inter-American community. President Obama
(quoted in BBC News, 2009) took an early stand in condemning the coup
and called for the restoration of Zelaya, describing the forced removal of an
elected president as a ‘terrible precedent’ for the region. While the US joined
with other Latin American countries in attempting to reverse the coup, that
effort was ultimately unsuccessful, and Micheletti presided over new elections
and a transition to a new president, Pepe Lobo, thereby thwarting Zelaya’s
efforts to return to power.
The Honduran crisis also illustrates how fault lines in US domestic
politics can complicate foreign policy responses to sensitive political issues
in Latin America. Obama’s initial support for Zelaya’s restoration was
strongly challenged by US conservative critics, led by Republican Senator
Jim DeMint, who blocked the nomination of several top State Department
appointments charged with handling Latin American policy. DeMint’s sup-
port for the interim government of Roberto Micheletti, created a situation
where the Obama administration’s stance on Honduras was being actively
undermined by members of the US Congress. This allowed Micheletti and
Shaw
Daniel P. Erikson 53
his allies to run out the clock until the previously scheduled elections on
29 November, after which they could be reassured that Zelaya would not
return to power. For its part, Brazil (which had hosted Zelaya in its Honduras
embassy when he covertly returned to the country) was not impressed with
the US response and US–Brazil relations suffered strain (see Heine, 2009).
The Honduras situation highlights the increasingly complicated nature
of the US relationship with Latin America and the Caribbean. In order to
pursue the US national interest, the Obama administration is compelled
to navigate between the contentious US politics regarding Latin America,
as well as the issues and concerns of the countries of the region which are
becoming increasingly assertive. The emergence of a regional hegemon in
Brazil has added a new dimension to this difficult balancing act that fore-
shadows the potential for more friction in the years ahead.
If the stakes were high for a successful outcome of the Fifth Summit of the
Americas in Trinidad and Tobago in April 2009, the bar was set low. The pre-
vious inter-American summit, which took place in Mar del Plata, Argentina
in 2005, was widely viewed as a disaster. In an effort to play to domestic
sentiments opposed to a visit by President Bush, the government of Nestor
Kirchner had given its blessing to a protest rally of 25,000 demonstrators who
included Argentine soccer legend Diego Maradona. Venezuela’s President
Chávez took advantage of the venue to deliver a scathing, two-hour indict-
ment of President Bush and the US-backed plan to develop the FTAA, over
which summit negotiations later collapsed in acrimony. Against this back-
drop, the 2009 summit provided Obama with an important opportunity
to begin fleshing out specific proposals made during his campaign. Two initia-
tives that were especially highlighted were the ‘Energy Partnership for the
Americas’ to forge a path toward sustainable growth and clean energy (see
Spencer, 2009), and the pledge to increase aid to the Americas through targeted
micro-financing, vocational training, and small enterprise development to
help achieve the United Nations Millennium Development Goals by 2015.
When Obama arrived at the summit, there was anticipation about seeing
the new US leader perform for the first time on the hemispheric stage.
Furthermore, his visit to Trinidad was preceded by a flurry of activity related
to Cuba. A group of legislators from the Congressional Black Caucus became
the first American politicians to meet Fidel Castro since the former Cuban
leader fell ill three years ago. The Obama administration also repealed
restrictions on the ability of Cuban Americans to travel back to Cuba and
send money to their families living on the island, prompting Raúl Castro
(quoted in CNN, 2009) to declare that ‘we have sent word to the US govern-
ment in private and in public that we are willing to discuss everything,
human rights, freedom of the press, political prisoners, everything’. At a
Shaw
54 The Obama Administration and Latin America
press conference en route to the summit, Hillary Clinton responded, ‘We are
continuing to look for productive ways forward because we view the present
policy as having failed … We welcome his comments and the overture they
represent, and we are taking a very serious look at how to respond’ (quoted
in Stolberg and Barrionuevo, 2009).
During his visit to Trinidad, Obama contributed to a possible diplomatic
breakthrough when he announced to 33 of the assembled leaders that
the US was seeking a ‘new beginning’ in its tormented relationship with
Havana (Richter and Nicholas, 2009). Not everyone was convinced, how-
ever. During a 50-minute speech, Nicaragua’s President Daniel Ortega
lambasted US policies and focused on Cuba’s exclusion from the summit:
‘I cannot feel comfortable by being here. I feel ashamed of the fact that
I’m participating at this summit with the absence of Cuba’ (quoted in
Rampersad, 2009). Ortega then blasted the US government’s backing for
the Bay of Pigs invasion in April 1961, led by Cuban exiles, although he
acknowledged that Obama ‘obviously doesn’t have any responsibility for
that historic event.’
Obama told the assembled leaders, ‘We cannot let ourselves be prisoners of
past disagreements. I am very grateful that President Ortega did not blame
me for things that happened when I was three months old. Too often, an
opportunity to build a fresh partnership of the Americas has been under-
mined by stale debates’ (quoted in Fox News, 2009). Obama (2009) went
on to say:
The United States seeks a new beginning with Cuba. I know that there is
a longer journey that must be traveled to overcome decades of mistrust,
but there are critical steps we can take toward a new day. I’ve already
changed a Cuba policy that I believe has failed to advance liberty or
opportunity for the Cuban people. We will now allow Cuban Americans
to visit the island whenever they choose and provide resources to their
families – the same way that so many people in my country send money
back to their families in your countries to pay for everyday needs. Over
the past two years, I’ve indicated, and I repeat today, that I’m prepared to
have my administration engage with the Cuban government on a wide
range of issues – from drugs, migration, and economic issues, to human
rights, free speech, and democratic reform. Now, let me be clear, I’m not
interested in talking just for the sake of talking. But I do believe that we
can move US–Cuban relations in a new direction.
In addition to the attention on Cuba’s absence, the image that came to domi-
nate the coverage of the summit was a handshake that occurred between
Obama and Chávez early in the gathering. ‘I greeted Bush with this hand
eight years ago’, Chávez intoned to Obama. ‘I want to be your friend’.
The Venezuelan President later gave Obama a Spanish-language copy of The
Shaw
Daniel P. Erikson 55
Shaw
56 The Obama Administration and Latin America
Upon entering the White House in January 2009, the Obama adminis-
tration had to move quickly to confront a range of pressing challenges.
There is little doubt that the new president’s to-do list was to be domi-
nated by the economic crisis, Afghanistan, and Iraq. Issues facing Latin
America and the Caribbean, though important, were of less immediate
concern. That does not mean, however, that Obama has not engaged in
serious and substantive work to help repair the damage that the Bush
administration wrought on US–Latin American relations. Moreover,
there is now a window of opportunity to push through significant
changes and lay the foundation for implementing Obama’s vision for
renewing US leadership in the Americas. Indeed, Obama’s election ushered
in a welcome honeymoon period for his administration in a region that
is strategically important for US interests – and the challenge was to
prolong this moment and harness it to rebuild some semblance of hemi-
spheric cooperation.
The path ahead will not be easy, but Obama has already substantially reca-
librated US–Latin America policy in the direction of engagement in small
but important ways. President Obama and members of his cabinet have
frequently met with their counterparts throughout Latin America and the
Caribbean and emphasized multilateral diplomacy as the central instrument
for addressing the region’s concerns. The US supported a resolution backed
by Latin American countries to lift Cuba’s suspension from the Organization
of American States, and has stood with Latin American countries in calling
for the restoration of democratic rule in Honduras. Under Obama, US rela-
tions with Latin America appear to be on the mend, but the progress to
date is fragile and by no means irreversible. The political situation in Latin
America and the Caribbean has shifted considerably in recent years and the
new assertiveness of many regional countries, especially Brazil, has created
an increasingly complex situation.
Although the early hopes for momentous change have begun to dis-
sipate, the presidency of Barack Obama still has the potential to bring
about an important restructuring of inter-American relations. In retrospect,
the initial warm glow of good feelings was always destined to give way to
a more pragmatic understanding on both sides of the relationship regarding
the possibilities and limits of what the US and Latin America can expect
of each other. But throughout the Americas, the desire remains that
Shaw
Daniel P. Erikson 57
Note
1. This chapter originally appeared as part of the CIGI Working Paper series and was
written prior to the author taking on his current position. The opinions expressed
in it are solely those of the author and do not necessarily reflect the views of any
affiliated institutions including the United States Government, The Centre for
International Governance Innovation or its Board of Directors and/or Board of
Governors.
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Thaw with Cuba’, New York Times. April 18. Available at http://www.nytimes.
com/2009/04/18/world/americas/18prexy.html.
Sweig, Julia E. (2010). ‘An American in Brazil’, The New York Times. March 2. Available
at http://www.nytimes.com/2010/03/03/opinion/03iht-edsweig.html.
The Telegraph (2008). ‘Venezuelan president Hugo Chávez Hoping for a Barack Obama
Victory’, November 2. Available at http://www.telegraph.co.uk/news/worldnews/
southamerica/venezuela/3369053/Venezuelan-president-Hugo-Chavez-hoping-for-
Barack-Obama-victory.html.
United Press International (UPI) (2010). ‘Russia Displaces US as Latin Arms Source’,
UPI. February 8.
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3
The Caribbean in a Turbulent World
Norman Girvan
The crisis that overtook the world economy in 2007–9 intersected a long-term
process of global reconfiguration that is marked by declining US power.
Concurrently, this is taking place during a process of global climate change
that presents potentially cataclysmic consequences for small island states.
Caribbean societies1 are vulnerable to both of these global developments and
challenged in their capacity to adapt to them. Political fragmentation and a
‘dependency syndrome’ combined with limitations of size have resulted in
a pattern of reactive rather than strategic decision making and a tendency
to seek solutions through alignment with extra-regional powers. Regional
cooperation represents one means by which Caribbean societies can secure a
greater measure of autonomy vis-à-vis the wider world. However, Caribbean
regionalism contends with a formidable legacy of geography, history and
geopolitics and as such, remains an elusive goal.
In this chapter, I first review the challenges to the Caribbean that have
resulted from the world economic crisis and the nature of responses thus far.
Then I discuss the challenges that are associated with long-term structural
shifts in global geo-economic and geopolitical configuration. Here, I highlight
the momentous changes that have occurred in the Latin American political
economy in the past ten years and review their implications for the Caribbean.
Next I review the changing dynamics of regionalism in the Caribbean, their
relationship to these developments, and assess their future prospects. There is
a brief conclusion.
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Norman Girvan 61
projects a 1.2 per cent contraction in Caribbean sub-regional GDP for 2009,
a deterioration of over 8 per cent relative to 2006 (Caribbean Press Releases,
2009). ECLAC expects the slowdown to last through 2010 (Commission for
Latin America and the Caribbean, 2009, p. 46). Most affected were the tourism-
dependent economies of Bahamas, Barbados and Jamaica – the latter
being also crippled by the closure of a large part of its aluminium industry
(International Monetary Fund, 2009a, p. 193). By September 2009, seven
CARICOM countries had turned to the International Monetary Fund (IMF)
for crisis-related financing.2 Jamaica, with the largest package, announced a
20 per cent budget cut five months into the 2009/10 fiscal year (Helps, 2009).
Insofar as IMF loans will require fiscal contraction, this will exacerbate the
effects of contraction in the external sector in the affected countries.
The social impact of the crisis will likely be uneven between countries and
socio-economic groups: some countries will suffer more than others and the
burden(s) will fall on the more vulnerable groups in their populations. Time
lags in the production of social statistics will make it difficult to measure and
analyse these impacts before they become problematic. The potential long-
term social and political repercussions are also not yet clear. There is the
ever-present possibility of social unrest and political instability. Government
approaches to the IMF have aroused opposition (Foster, 2009). Tensions
have arisen within the Caribbean Community over the subject of informal
intra-regional migration. In 2009, Barbados’s announced policy of remov-
ing undocumented CARICOM nationals initiated a major controversy and
elicited strong reactions from Guyana, St Vincent and the Grenadines in
particular (see Bradshaw, 2009; Stabroek Staff, 2009; Office of the President
of Guyana, 2009; and Ramjeet, 2009). A similar policy reportedly under way
in Antigua and Barbuda also became controversial (Jamaica Observer, 2009).
Barbados’s earlier request to review the freedom of movement provisions
of the CARICOM Single Market Economy (CSME) is also thought to be a
response to pressures resulting from the global slowdown.
CARICOM has had its share of financial institution failures that required
costly government interventions. The threatened failure in January 2009 of
the CL Financial group, a major regional conglomerate headquartered in
Trinidad and Tobago with operations in several other CARICOM countries,
led to a government takeover of the group and cash injections of up to TT$
5 billion to finance payouts to depositors and policyholders (see Trinidad and
Tobago News Blog, 2009; Neptune, 2009). The government of Trinidad and
Tobago also financed payouts to other CARICOM countries. The threatened
failure was due to serious deficiencies in the regulatory regime of the host
country (Girvan, 2009). In February 2009, the Stanford International Bank,
based in Antigua and Barbuda, failed after its owner was indicted in the
US on seven counts of wire fraud, ten counts of mail fraud, conspiracy to
obstruct an investigation for the Securities and Exchange Commission (SEC),
obstruction of an investigation by the SEC and conspiracy to commit money
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62 The Caribbean in a Turbulent World
laundering, all totalling US$ 7 billion (Cricinfo Staff, 2009). Following this,
the chief financial regulator of the state was indicted for having accepted
bribes from Stanford International to overlook financial irregularities at
the bank (Associated Press, 2009). The case has exposed the government to
legal action from the international depositors in the bank, who are claiming
damages of an amount that is approximately equal to 600 per cent of the
GDP of Antigua and Barbuda – estimated to be US$ 1225 million in 2008
(World Bank, 2008). The two cases illustrate how regulatory systems in small
Caribbean countries can be subverted by the resources and influence of large
financial institutions. They underline the need for a seamless, region-wide
regulatory system for the financial sector within the CARICOM region as a
whole. The legal instruments for this have been prepared but have yet to be
approved by governments.3
CARICOM leaders repeatedly stated that the crisis underlined the urgency
of the need to strengthen the Community, and the necessity for a collective
confrontation of the challenges (Pilgrim, 2009). The difficulty has been to
give practical effect to this principle. Three different task forces were set up
by CARICOM leaders between January and July 2009,4 but the net result was
a decision to ‘coordinate approaches’ to the international financial agencies
(Georgetown Communiqué, 2009). In practice, this has meant little more
than information sharing. The basic problem is the absence of institutional
capability within the CARICOM system to undertake coordinated external
financing and macroeconomic policies. There is no CARICOM monetary
union, no CARICOM central bank and no community budget. The CARICOM
Development Fund, which became operational in 2009, is not meant to deal
with short-term emergency financing needs of member states. Hence, they
turn to the IMF and, in one instance, to Venezuela. The ad hoc measures
that have been adopted lack regional coherence, do not strengthen regional
institutions, do not necessarily mitigate the social impact, and come with con-
ditionalities that necessarily involve some loss of policy autonomy. A robust
regulatory and institutional framework would enable the community to better
mitigate the impact of the crisis and to manage it collectively. Hence, there is
a connection between the strength of regionalism, the space for autonomous
policies, and the degree of resilience in response to external shocks.
Global reconfiguration
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Norman Girvan 63
as global reserve currency and US dominance over the IMF, both remnants
of the defunct Bretton Woods system, are therefore in growing contesta-
tion. The US will resist the calls for change as long as possible; however,
some restructuring seems inevitable. Economically, Caribbean countries are
strongly linked to the centres of world economic power that are in relative
decline – the US and Western Europe. CARICOM’s merchandise exports to
the US grew at a rate of 8.7 per cent per year in the period 1993–2003 (Jessen
and Vignoles, 2005, p. 58) and accounted for approximately 48.7 per cent
of CARICOM’s exports and 35.9 per cent of their imports over the period
2001–6 (CARICOM, 2008, pp. 7, 9); the US is the main tourist market for the
larger Caribbean region and constitutes 53 per cent of the total number of
tourist arrivals, Europe accounts for 23 per cent (ECLAC, 2003); Spain and
the US were the main sources of foreign direct investment (FDI) to the region
in 2008, representing 9 per cent and 24 per cent of the total respectively
(Jamaica Observer, 2010); virtually all of their remittances are concentrated
in the US, Canada, and the European Union. This magnifies the regional
impact of the economic downturn in these countries. China is a major
source of imports and a growing source of aid and investment for the region.
Asia’s share of imports from the CARICOM was averaged to be 14.7 per cent
over the period 2001–6 (CARICOM, 2008, p. 7). Its main trade interest so
far has been in acquiring natural resource products, particularly bauxite,
aluminium and timber. Only 4.1 percent of CARICOM’s export market is in
China (ibid, p. 9), and an insignificant fraction of its tourist market comes
from Asia. This limits the potential spin-offs to regional economies from
the relatively high-growth performing Asian economies. Hence, CARICOM
countries should seek to develop their trade-investment-tourism linkages
with the world’s emerging economies, including value-added products in
agricultural and manufactured exports. Several initiatives have been taken,
individually and collectively, to develop relations with the government of
China. However, individual CARICOM nations evidently lack the capacity to
adequately service relations with the entire Asian continent. A joint ‘Asian
strategy’ carried out by the Community as a whole would help to share costs
and exploit synergies. This requires an improved governance framework and
institutional capability to handle the region’s external economic relations.
Developments over the past decade have significantly altered the political,
ideological and institutional landscape of Latin America (see Cooper and
Heine, 2009). This chapter identifies seven features of the ‘New Orientation’
that are of particular relevance to the Caribbean. First, governments have
been elected in the majority of Latin American countries that are critical
of, or opposed to, neoliberalism and the Washington Consensus,6 and are
experimenting with various alternatives.7 Second, new social movements
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64 The Caribbean in a Turbulent World
have played a key role in this shift. This is exemplified by the large attendance
at the annual gatherings of the World Social Forum since 2001 and the role
of social movements in the elections of Luiz Inacio Lula da Silva in Brazil,
Evo Morales in Bolivia and Rafael Correa in Ecuador. These movements are
the result of consciousness-raising and political mobilization of historically
marginalized groups in Latin American society: indigenous peoples, African-
Latin Americans, campesinos, women and other elements of the poor under-
class. Third, the new ideological orientation often extends to questioning
the prevailing Western models of ‘democracy’ and ‘development’. Notions of
‘participatory democracy’ are being developed featuring the political enfran-
chisement of marginalized groups, community councils and the like;8 and
alternative ‘models of civilization’ are proposed. An example of this is the
following extract from a declaration of indigenous people at the 2009 World
Social Forum:
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Norman Girvan 65
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66 The Caribbean in a Turbulent World
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68 The Caribbean in a Turbulent World
Integration initiatives in the Caribbean have been driven by the need to over-
come the limitations of size as well as by a sense of shared history and
culture. The establishment of the West Indies Federation (1958–62), between
ten British territories in the region, originated with the belief that the indi-
vidual territories were too small to achieve national independence on their
own. Once this rationale was removed the federation foundered. Nonetheless,
economic regionalism and functional cooperation have flourished in the
post-colonial period, with fresh impetus being created by the challenges of
globalization. In recent years regionalism has widened to encompass the
entire Caribbean basin and the different linguistic zones of the region.
Unification of national markets through economic integration, resource
pooling, and the realization of synergies through functional cooperation are
the chief motives for current integration initiatives. The former is presently
centred on the Caribbean Community’s drive to create a CARICOM Single
Market and Economy (CSME). Functional cooperation is also a major element
in the CARICOM programme; and it is the principal raison d’être for the
establishment of the Association of Caribbean States (ACS).
CARICOM
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Norman Girvan 69
Tobago – and its growth is not attributable to market integration (Jessen and
Vignoles, 2005). The benefits of Open Regionalism are likely to be limited
due to the structurally undiversified nature of CARICOM economies, which
export mainly resource products and services to extra-regional markets
(ECLAC, 2004). The slow pace of CSME implementation has been blamed
on the absence of supranationality in the CARICOM governance arrange-
ments; including the absence of binding Community law, the discretionary
status of implementation of decisions by CARICOM organs, and the absence
of sanctions for non-implementation (Girvan, 2005; Brewster et al., 2002).
Since 1992, proposals have been made for reforms of CARICOM governance
that would give binding effect to the decisions of Community organs and
establish an executive mechanism to oversee implementation. This would
provide CARICOM governance with a degree of supranationality that
would presumably ensure speedier and more efficient implementation. In
the Rosehall Declaration (2003), the governments approved these changes
in principle but they have so far failed to reach agreement on subsequent
proposals aimed at giving effect to the declaration (Lewis, 2006). The
difficulty is that governments tend to perceive supranationality as less
an exercise in collective sovereignty and more a diminution of national
sovereignty. There is also the issue of possible incompatibility with the
provisions of national constitutions and fears that supranationality will
amount to ‘Federation (or political union) in disguise’. Complicating
the matter is the perception that the tangible economic benefits of such
changes are small.
In 2007, CARICOM leaders approved a ‘Single Development Vision’ which
charts a road map towards completion of the CSME by 2015 (Girvan, 2006).
The vision designates five industry clusters that will drive regional economic
growth and will be priority areas for the adoption of common policies and
support measures by regional governments. This will be supported by
measures to establish an enabling economic environment for private sector
activity, and a governance framework that both addresses the need for timely
implementation and engages the involvement of the social partners. The
report established a framework for the phasing of CSME implementation
in ways that would generate tangible benefits for the member states at each
stage. But it became difficult to operationalize after the superimposition of
an Economic Partnership Agreement (EPA) with the European Union onto
the CSME process; as well as several changes in governments. Since 2007,
no significant progress has been made in advancing the CSME or putting
the vision into effect. Currently CARICOM is preparing a Strategic Plan for
Regional Development that will focus on the provision of regional public
goods meant to advance the regional integration process.
The Organization of Eastern Caribbean States (OECS) is a six-state group-
ing within the CARICOM membership that is creating a sub-regional single
market and economy in advance of the CSME.18 The sense of cohesion
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70 The Caribbean in a Turbulent World
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72 The Caribbean in a Turbulent World
for a distinct ACS free trade configuration. With its crucial trade component
missing, the ACS was left with the mission to promote functional coopera-
tion in transport, tourism, and natural disasters. Cooperation in these areas
has consisted largely of the exchange of information and the conclusion
of regional agreements. The ACS has not assumed the role of interlocutor
in political matters among its members, or between them and external
powers. This role is carried out by existing regional and hemispheric organi-
zations, including the Organization of American States. ACS members have
also preferred to develop their mutual cooperation in bilateral mode rather
than through the ACS. For example Mexico, Venezuela, and Cuba have
each made bilateral cooperation agreements with CARICOM rather than
channelling their cooperation through the ACS. The US, as the principal
player in hemispheric affairs, has not interacted with the ACS because of
Cuban membership.
A significant achievement of the ACS, however, is the Caribbean Sea
Initiative in which the United Nations General Assembly is to grant recog-
nition of the Caribbean Sea as a Special Area for Sustainable Development,
and promote regional and international cooperation in the common man-
agement of this shared resource. As the Caribbean Sea is the single most
important element that ACS members have in common, cooperation on
its management represents the best possibility for establishing an ACS
‘niche’, one that it is uniquely qualified to fill. The focus here would be
on the sustainable management of the coastal and marine environment,
including cooperation on control of the shipment of hazardous materials
such as nuclear waste, oil spills, and cruise ship waste. Inasmuch as the
ACS members sit astride the major routes for trafficking in illegal drugs and
arms between North and South America, cooperation among themselves as
well as negotiating with the US on these matters is another possible area of
cooperation. Evidently a change in US policy towards the ACS and a willing-
ness to collectively engage the region on these subjects would be necessary.
US willingness to work with the ACS would trigger similar supportive
actions by other external players, such as Canada and the EU. ACS members
would need to decide whether they wish the organization to play this role;
they would need to empower the ACS by making it the focal point of coop-
eration in these areas and giving it the requisite political, diplomatic, and
financial support.
In conclusion
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Norman Girvan 73
Notes
1. In this chapter the term ‘Caribbean’ refers to the islands in the Caribbean Sea as
well as the mainland countries of Belize, French Guiana, Guyana, and Suriname.
The focus of the chapter, however, is on the member countries of the Caribbean
Community, referred to as ‘CARICOM’. The term ‘Greater Caribbean’ encapsulates
all the countries bordering the Caribbean Sea.
2. Jamaica was negotiating a US$1.2 billion standby arrangement; Dominica, St. Kitts-
Nevis, St Lucia, St Vincent and the Grenadines have already begun using either
the IMF’s Rapid Response Facility (RRF) or the Exogenous Shocks Facility (ESF).
Grenada has requested continuation of a poverty reduction scheme; Barbados has
indicated that it will begin to utilize its IMF allocation of special drawing rights
of around US$80m.
3. A CARICOM Financial Services Agreement and CARICOM Investment Code have
been drafted, but not adopted.
4. The first task force was established after the 13th Meeting of COFAP on 29 January
2009. The second and the third were established after the 30th CARICOM Heads
of Government Meeting 2–5 July 2009.
5. Growth estimates for emerging countries have been revised upwards to 5.5 per
cent in 2009 and 7.0 per cent in 2010; growth projects for the US declined from
0.2 per cent to ⫺ 2.6 per cent in 2009 and are estimated to increase to 0.8 per
cent in 2010; Western Europe growth estimates declined from ⫺ 0.6 per cent
to ⫺ 4.8 per cent in 2009 and are estimated to increase to ⫺ 0.3 per cent in 2010
(International Monetary Fund, 2009b).
6. At the time of writing in September 2009, this is the case for Argentina, Bolivia,
Brazil, Chile, Ecuador, El Salvador, Honduras, Guatemala, Paraguay, Uruguay, and
Venezuela.
7. As pointed out by Macdonald and Ruckert (2009, p. 67) there is no single ‘Post-
Neoliberal’ economic model that is practised, and several governments (e.g.
Brazil, Argentina, Chile) retain some elements of the Washington Consensus,
while abandoning others.
8. To this end, constitutions have been rewritten in Venezuela, Bolivia, and Ecuador,
and received popular approval in national referenda.
9. This is not to say that CARICOM countries would have derived significant
benefits from the FTAA, which is debatable. Instead, the breakdown of the nego-
tiations is a clear signal that relations of power in the hemisphere have changed
dramatically.
10. Under the original arrangement the percentage of the oil bill financed as a loan
reached 50 per cent when the price of oil exceeded $100/barrel. In June 2009
Petrocaribe proposed to adopt a flat rate of 50 per cent payable in cash and
50 per cent as a credit.
11. The 1 per cent interest rate applies at an oil price above $40/bbl; below $40 the
rate applied is 2 per cent.
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74 The Caribbean in a Turbulent World
12. Dominica in 2008, and Antigua and St. Vincent and the Grenadines in 2009.
13. The Bank has more than $ 1 billion in capital, which it uses to make loans avail-
able to member states in order to undertake infrastructural, health, education, and
social and cultural developments. Loans from the Bank of ALBA do not contain
any conditions and the bank is run on a democratic basis (see Hattingh, 2008).
14. $10 million was disbursed on signing of the agreement with the remainder to be
disbursed on approval of projects.
15. UNASUR initiatives include the creation of a single market to eliminate the fees
for non-sensitive products by 2014 and non-sensitive items by 2019.
16. ALBA member Dominica was present at the summit in addition to St Vincent and
the Grenadines.
17. Security was recently added as the fourth pillar.
18. On 18 June 1981, the OECS was established with the signing of the Treaty
of Basseterre. The objectives of the OECS were: (a) promoting cooperation
among member states and defending their sovereignty, territorial integrity, and
independence; (b) assisting member states in meeting their obligations and
responsibility to the international community with due regard to the role of
international law as a standard of conduct in their relationships; (c) establishing
and maintaining, wherever possible, arrangements for joint overseas representa-
tion and common services; and (d) promoting economic integration among the
member states.
19. Article 3 of the original treaty differentiates between LDCs and MDCs. MDCs
are specified as Barbados, Guyana, Jamaica, and Trinidad and Tobago. All other
countries are classified as LDCs (see Treaty Establishing the Caribbean Community,
1973, Article 3).
20. Grenada, St, Lucia, and St. Vincent and the Grenadines.
21. The Task Force Report is currently the subject of consideration and consultation
by the participating governments.
22. According to the Section on the Implementation of the Joint Declaration (b):
‘The signatory countries hereby undertake to conclude a framework agreement
on sustainable economic, social and political development that commits them in
areas of common interest to: (b) facilitate the development and implementation
of the agreements necessary for the achievement of the Single Economy, includ-
ing the Agreement for the Development of Financial Services, the Framework
for the Integration of the Capital Market, the Investment Policy Harmonization
(Caribbean Investment Code), Framework for the Harmonization of Fiscal
Incentives, Framework for Fiscal Policy Harmonization and the Framework for
Monetary Cooperation’ (see Joint Declaration, 2008).
References
ALBA (2009) ‘What is ALBA?’ The Bolivarian Alternative for the Peoples of the Americas.
Available at http://www.alternativabolivariana.org/pdf/alba_mice_en.pdf.
Associated Press (2009) ‘Fired financial regulator arrested in Stanford case – Billionaire
pleads not guilty in Houston court’, The Jamaica Gleaner, 26 June. Available at
http://www.jamaica-gleaner.com/gleaner/20090626/business/business6.html.
Bradshaw, Maria (2009) ‘PM’s Count’, Nation News, 28 June. Available at http://www.
nationnews.com/news/local/only-four-guaynese-deported-FRONT-PAGE-LEAD.
Brewster, Havelock R., Thomas Dolan, and Taimoon Stewart (2002) ‘Implementation of
the Caribbean Single Market Economy’, World Bank: Caribbean Country Management
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Norman Girvan 75
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76 The Caribbean in a Turbulent World
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Norman Girvan 77
OECS Secretariat (2008) ‘OECS agree to Trinidad and Tobago Membership’, St Lucia:
Government Information Services, 15 September. Available at http://www.stlucia.gov.
lc/pr2008/september/oecs_agree_to_trinidad_and_tobago_membership.htm.
Office of the President of Guyana (2009) ‘President Jagdeo Slams Rhetoric of
Barbadian PM’, Office of the President of the Republic of Guyana, 2 July. Available at
http://opnew.op.gov.gy/index.php?option⫽com_content&view⫽article&id⫽610:
president-jagdeo-slams-rhetoric-of-barbadian-pm.
Osava, Mario (2008) ‘Latin America: Summit Marks Distance from US’, Inter Press
Service, 17 December. Available at, http://ipsnews.net/news.asp?idnews⫽45153.
Pearson, Tamara (2009) ‘Venzuela and ALBA Promote ‘New Climate’ in Summit of the
Americas’, Venezuela Analysis, 21 April. Available at http://www.venezuelanalysis.
com/news/4382.
Pilgrim, Clarence E. (2009) ‘Economic Task Force – Another CARICOM Step in
the Right Direction’, KaieteurNews Online, 8 February. Available at http://www.
kaieteurnewsonline.com/2009/02/08/economic-task-force-another-caricom-step-in-
the-right-direction/.
Ramirez, Rafael (2009) Petrocaribe produjo ahorro de 1.400 millones de dolares. Venezuela:
Prensa Presidencial.
Ramjeet, Oscar (2009) ‘St Vincent Prime Minister lashes out at Barbados
Immigration Policy’, Caribbean-American Forum, 16 May. Available at http://www.
caribbeanamericanforum.com/?p⫽919.
Revised Treaty of Chaguaramas (2001) Revised Treaty of Chaguramas Establishing the
Caribbean Community including the CARICOM Single Market and Economy. Available
at http://www.worldtradelaw.net/fta/agreements/caricomrevisedfta.pdf.
Rosehall Declaration (2003) The Rosehall Declaration on ‘Regional Governance and
Integrated Development’, CARICOM Secretariat, 2–5 July. Available at http://www.
caricom.org/jsp/communications/meetings_statements/rose_hall_declaration.
jsp?menu⫽communications.
Spencer, W. Baldwin (2009) ‘PM Spencer’s Address to the Nation on Receipt of
US$50 Million from Venezuela’, The Official Website of the Government of Antigua
and Barbuda, 13 August. Available at http://www.ab.gov.ag/gov_v2/government/
speeches/2009/speech_2009aug13_id2.html.
Stabroek Staff (2009) ‘Guyanese are Being Raided in Barbados’, Stabroek News, 17 June.
Available at http://www.stabroeknews.com/2009/news/local/06/17/guyanese-are-
being-raided-in-barbados/.
Treaty Establishing the Caribbean Community (1973) 4 July. Available at http://www.
caricom.org/jsp/community/original_treaty-text.pdf.
Trinidad and Tobago News Blog (2009) ‘Government to Bailout CLICO’, Trinidad and Tobago
News, 30 January. Available at http://www.trinidadandtobagonews.com/blog/?p⫽924.
VenWorld (2008) ‘Venezuela and ALBA Create Food Security Fund’, Venezuela World,
23 April. Available at http://venworld.wordpress.com/2008/04/23/venezuela-and-
alba-create-food-security-fund/.
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396.html.
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Part II
Responding to Challenges
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4
Economic Integration in the
Americas: An Unfinished Agenda
Antoni Estevadeordal and Kati Suominen
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82 Economic Integration in the Americas
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Antoni Estevadeordal and Kati Suominen 83
Table 4.1 Trend comparisons of trade openness and regional bias (1990 and 2007)
1990 2007
a b
Openness Regional bias Openness Regional bias
Argentina 15% 22% 45% 29%
Brazil 15% 7% 26% 10%
Canada 51% 11% 70% 12%
Chile 65% 70% 80% 67%
Colombia 35% 71% 38% 68%
Costa Rica 67% 26% 102% 27%
El Salvador 50% 11% 76% 15%
Jamaica 100% 12% 109% 10%
Mexico 38% 27% 58% 29%
US 21% 5% 28% 16%
Brazil
Jamaica
Colombia
US
Argentina
Costa Rica
Chile
Mexico
Canada
EI Salvador
0 10 20 30 40 50 60 70 80
Imports from Western Hemisphere RTA partners as % of total imports from world
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84 Economic Integration in the Americas
Jamaica
Brazil
Colombia
US
Argentina
Chile
Costa Rica
EI Salvador
Canada
Mexico
0 10 20 30 40 50 60 70 80
Imports from Western Hemisphere RTA partners as % of total imports from world
partners, which increased from 5 per cent in 1990 to 19 per cent in 2008
(see Figures 4.1 and 4.2).
Intraregional trade flows seem small compared to total exports in Latin
America and the Caribbean, reaching 19 per cent in 2008. The depth of
intraregional integration also pales in comparison with other regional
blocs with higher ratios, such as the European Union (64%), Asia Pacific
(42%) and the Association of Southeast Asian Nations (ASEAN, 23%) (see
Table 4.2).
However, intraregional trade in the LAC region has been very dynamic,
rising to 19 per cent of the total in 2008.3 Also sub-regional trade has grown
rapidly. For example, intraregional trade for Mercosur grew at an average of
22 per cent between 1990 and 2008, compared with just 14 per cent extra-
regional flows in the same period. By comparison, the difference between
intraregional and extraregional trade growth was smaller for some blocs,
such as the North American Free Trade Agreement (NAFTA) (9% and 8%
respectively), or remained even for others, such as the Central American
Common Market (CACM) (both at 20%).
Many countries are particularly integrated in their sub-regional markets,
including Argentina (39% exports destined to the subregion), Bolivia (63%),
Ecuador (36%), El Salvador (66%), and Guatemala (46%) (see Table 4.3).4
The lower ratios of intraregional trade in CARICOM and Mercosur suggest
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Table 4.2 Intraregional trade (share of exports), 2008 (changes from 1990 in italics; bold cells are intraregional trade flows)
Direction
Exporting LAC Mercosur NAFTA CARICOM CACM US + Canada EU Asia Pacific ASEAN
Region
85
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86
Table 4.3 Intraregional trade in the Western Hemisphere (1990–2009)
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Antoni Estevadeordal and Kati Suominen 87
The origins of hemispheric integration date back to the 1950s when the first
set of agreements were made under the Latin American Free Trade Association
(LAFTA). LAFTA focused on inward-looking protectionist schemes and support
import substitution policies being implemented by Latin American coun-
tries. Other earlier summits in the Western Hemisphere were convened
more than a generation ago, in the context of the Cold War in 1956 and
1967. These focused on the size and shape of US aid programmes and the
relationship between trade preferences and immediate security concerns
(see Feinberg, 1997). Since the Second World War, the intellectual climate and
objectives for hemispheric cooperation have shifted. Throughout the period
of ‘Old Regionalism’ – from 1950 to 1975 – regional agreements such as the
Andean Pact (1969) and the Caribbean Community and Common Market
(CARICOM, 1973) initiated the pathways for developing a common market,
but implementation was at times incomplete.
The debt crisis in the 1980s encouraged countries to replace import sub-
stitution and active state intervention. The US re-engaged the region with
a bipartisan consensus of promoting democracy. In the 1990s, about 15
countries (over a third in the region) turned democratic, and the hemisphere
moved decisively away from trade as aid towards adopting trade liberalization,
structural reforms, and privatizing state-owned enterprises.
The agreements of the ‘Old Regionalism’ were based on PTAs that focused
primarily on market access in goods and to locking-in open regulatory
regimes and tariff phase-outs. With the successful implementation of NAFTA
and the launch of hemispheric FTAA negotiations in 1994, Latin America
re-emerged into a period of ‘New Regionalism’ – exemplified by the launch
of Mercosur (1991), the Central American Common Market (CACM, 1991),
and North American Free Trade Agreement (NAFTA, 1992). Most recently,
11 Latin America countries are exploring methods and modalities for better
integrating themselves into a single bloc. Since the mid-1980s, unilateral
trade reforms by most LAC countries led to a sharp decline in average most
favoured nation (MFN) tariff rates, from 40 per cent to 10 per cent in 2000
(see Estevadeordal and Robertson, 2004).
Recent bilateral and regional PTAs in the Western Hemisphere are modelled
on NAFTA but include more comprehensive provisions for goods, services,
and investment; there are also increased provisions for means of beyond-
border integration, such as government procurement, intellectual property
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88 Economic Integration in the Americas
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Antoni Estevadeordal and Kati Suominen 89
the World Trade Organization (WTO). The Uruguay round also made three
major changes to the rules of world trade by opening the process for negoti-
ating liberalization of the most heavily protected industries, agriculture and
textiles; expanding international trade rules to cover services; and introducing
new issues such as technical barriers to trade and intellectual property rights.
The FTAA negotiations were troubled, however. Although NAFTA illus-
trated the possibilities for economic integration between industrial and
developing economies, there were protectionist pressures and growing
tensions in the hemisphere. Negotiating positions over agricultural subsidies
and anti-dumping between countries of the Northern hemisphere and the
Southern hemisphere stalled discussions. The talks collapsed in 2003 in
the face of divergent interests and seemingly irreconcilable bargaining positions
between the main economies of the region: Brazil and the US.
Future scenarios
There are several new pathways for the future of trade integration in the
Americas to take: multilateralism, hub-and-spoke models, and regional con-
vergence to an FTAA-like agreement.
Sub-regionalism scenario
By deepening sub-regional integration initiatives (such as Mercosur, NAFTA,
CACM and CARICOM), Latin American countries can consolidate regional
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90 Economic Integration in the Americas
Hub-and-spoke model
In this scenario, the US would serve as the hub, with other countries joining
as spokes in various bilateral PTAs. The US pioneered the idea of competi-
tive liberalization through bilateral and regional PTAs, beginning with trade
agreements with Israel and Canada in the 1980s, and Canada and Mexico
in 1994. US PTAs with Chile, CAFTA-DR, Panama, Andean-3, and continued
deepening integration in NAFTA, can help maintain momentum and establish
negotiating precedents for a broader regional agreement. For example, recent
studies have shown that preferential cuts in tariffs were often followed by
multilateral cuts in the same tariffs (see Estevadeordal, Freund and Ornelas,
2009). The potential drawback of pursuing PTAs is resulting complexity and
foregone scale economies across PTAs. Because of multiple negotiations there
would be overlapping regulatory standards and rules of origin requirements.
Convergence of agreements
A region-wide agreement would yield great economic benefits. It would
better link the major economies in North and South America, whose bilateral
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Antoni Estevadeordal and Kati Suominen 91
Beyond agreements
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92 Economic Integration in the Americas
The financial instability caused by the global financial crisis places an onus
on common efforts to safeguard prosperity. One of the key means to guar-
anteeing growth and wellbeing is trade. In times of turmoil, exports have
served as a countercyclical force in hemispheric economies, propelling
growth and economic stability. Through good times and bad, trade has been
the anchor of our economies throughout the post-war era.
The current situation is important and calls not for recoiling and turning
our backs on liberalization, but for closer trade integration and liberaliza-
tion. In the area of trade the gains of hemispheric cooperation are perhaps
the most palpable and immediate. Some of the ideological and political
differences on trade and other issues could be resolved through trade and
integration. Connecting countries via trade would help to set the entire
region on a more prosperous plane and help ignite cooperation in other
areas. Since the 1990s, trade integration has fuelled hemispheric cooperation.
It has created trust, built cross-border networks of stakeholders, and developed
Shaw
Antoni Estevadeordal and Kati Suominen 93
Notes
The views expressed are those of the authors and do not necessarily reflect the views
or policies of the institutions they represent.
References
ECLAC (2007) Latin America and the Caribbean in the World Economy.
Estevadeordal, Antoni and Raymond Robertson (2004) ‘From Distant Neighbors to
Close Partners: FTAA and the Pattern of Trade’ in A. Estevadeordal, D. Rodrik, A. M.
Taylor, and A. Velasco (eds) Integrating the Americas: FTAA and Beyond. Cambridge:
Harvard University Press.
Shaw
94 Economic Integration in the Americas
Estevadeordal, Antoni, Caroline Freund and Emanuel Ornelas (2008) ‘Does Regionalism
Affect Trade Liberalization Towards Non-Members?’ CEP Discussion Papers dp0868,
Centre for Economic Performance, LES.
Estevadeordal, Antoni and Kati Suominen (2009) Bridging Regional Trade Agreements in
the Americas, with Jeremy Harris and Matthew Shearer. Washington: Inter-American
Development Bank.
Feinberg, Richard E. (1997) Summitry in the Americas: A Progress Report. Washington,
DC: Institute for International Economics.
Hagopian, Frances and Scott P. Mainwaring (eds), (2005) The Third Wave of
Democratization in Latin America: Advances and Setbacks. Cambridge: Cambridge
University Press.
Huntington, Samuel (1991) The Third Wave: Democratization in the Late Twentieth
Century. Norman, OK: University of Oklahoma Press.
McKinney, Joseph A. and H. Stephen Gardner (eds), (2008) Economic Integration in the
Americas. New York: Routledge.
Phillips, Nicola (2009) ‘Coping with China’, in Andrew F. Cooper and Jorge Heine
(eds), Which Way Latin America? Hemispheric Politics Meets Globalization. Tokyo:
United Nations University Press, pp. 100–21.
Rosales, Osvaldo, and José. E. Durán Lima, Sebastián Sáez (2008) ‘Trends in Latin
American Integration’, in Joseph A. McKinney and H. Stephen Gardner (eds),
Economic Integration in the Americas. New York: Routledge.
United Nations (2009), United Nations Commodity Trade Statistics Database (UN
Comtrade), available at: http://comtrade.un.org/kb/.
World Bank (2009), WDI 2009, available at: http://data.worldbank.org/data-catalog/
world-development-indicators/wdi2009.
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5
Building on Sub-Regional Economic
Integration Projects to Forge an
Energy and Climate Partnership of
the Americas
Thomas Andrew O’Keefe
Introduction
95
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96 Energy and Climate Partnership for the Americas
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Thomas Andrew O’Keefe 97
Decision 536 (as modified by Decision 639) also requires that Bolivia,
Colombia, Ecuador, and Peru coordinate efforts to build electrical inter-
connections between their respective national grids, establish a common
methodology for calculating the cost for using these interconnections, and
guarantee a fair price for access under short-term electricity contracts. The
four countries are also expected to make the necessary changes to their
domestic legal frameworks that will harmonize regulations related to the
use of the interconnections and the drafting of commercial contracts for
the purchase and sale of electricity. In order to facilitate the harmonization
effort and oversee implementation of the other goals established under
Decision 536, an Andean Committee of Regulatory and Legal Bodies for
Electricity Services was established.
Decision 557, issued by the Council of Andean Ministers of Foreign
Relations in June 2003, establishes a Council of Ministers of Energy, Electricity,
Hydrocarbons, and Mines of the Andean Community in order to ensure
adequate institutional support for all actions that may be required to assure
the regional integration of the energy sector.
Despite the existence of Decision 536 and its progeny, cross-border trade
in electricity within the Andean Community remains limited. In 2007, for
example, Colombia – considered the electricity powerhouse for the Andean
region – exported 877 gigawatt hours of electricity to Ecuador (out of a
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98 Energy and Climate Partnership for the Americas
total production of 54,551 gigawatt hours), less than what Brazil exported
to Argentina that year or what Argentina exported to Chile. Although
Colombia has in previous years exported to Ecuador about double the
amount of electricity it exported in 2007 (i.e. roughly 3% of the country’s
total electricity generation), Colombian exports to other Andean destinations
as well as electricity exported by other Andean Community nations within
the subregion have always been negligible.
CARICOM
Although there was much talk at the start of the twenty-first century about
developing a Common Caribbean Energy Policy, little substantive progress
has been achieved to date. This can be partially explained by the Petrocaribe
initiative launched by the Bolivarian Republic of Venezuela in 2005. Under
Petrocaribe, Venezuela agrees to supply a participating country with a set
volume of oil per day for domestic consumption. In return, the recipient
country must create a national oil company (if one does not already exist).
The amount of oil that Venezuela is willing to sell to the participating country
on credit is based upon the international market price for a barrel of oil at
the time of sale, which will also determine the number of years required for
full payment (i.e. the higher the price, the greater the amount sold on credit,
and the longer the payment period). In all cases, there is an initial grace period
of at least two years. Afterwards the interest rate on all outstanding balances
is either 1 or 2 per cent per annum (the exact interest rate again dependent
on the actual price of the barrel of oil). In addition, Venezuela is open to the
possibility of accepting partial payment with goods or services in lieu of cash.
To sweeten the attractiveness of participating in Petrocaribe, the Venezuelan
government has often promised to provide participating countries with
economic development grants that can be used to, among other things, build
storage facilities for imported petroleum shipments.
The Petrocaribe Energy Cooperation Agreements that all CARICOM member
states – with the notable exception of Barbados and Trinidad and Tobago –
have signed with Caracas, have shifted their traditional reliance on petroleum
imports away from Trinidad and towards Venezuela.4 Facilitating this move
has been the fact that Trinidad and Tobago eventually acquiesced in waiving
CARICOM’s 20 per cent Common External Tariff (CET) for oil imported from
Venezuela. The government in Port-of-Spain did so when Venezuela’s President
Hugo Chávez promised to utilize Trinidadian facilities to refine Venezuelan
crude oil bound for CARICOM countries that lack their own refineries. At
present only the Bahamas, Jamaica, and Suriname have refining capacity
(see Bryan, 2007, p. 381). Despite this promise, the loss in market share once
enjoyed by Trinidadian petroleum exports within the Caribbean market has
created internal CARICOM frictions.5 Petrocaribe has also undermined the
economic viability of constructing a 600-mile undersea natural gas pipeline
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Thomas Andrew O’Keefe 99
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100 Energy and Climate Partnership for the Americas
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Thomas Andrew O’Keefe 101
domestic needs are first met.7 This apprehension could change once SIEPAC’s
single transmission line becomes fully operational.
Another deficiency of the current Central American system is its high
dependency on fossil fuels to generate electricity and the detrimental
impact this has on global efforts to redress climate change. Ironically this
phenomenon responds to the widespread privatization of electricity genera-
tion in individual Central American countries throughout the 1990s. Private-
sector firms tend to opt for projects that have shorter gestation periods in
order to more quickly recoup profits on the initial investment. Accordingly,
electricity generation based on fossil fuels has been favoured in Central
America because the initial capital investment cost is anywhere from half
to two-thirds less than for most hydropower equivalents (see Center for
International Governance Innovation, 2009, p. 11).
Mercosur
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102 Energy and Climate Partnership for the Americas
local law and should not impose additional terms that are not required for
transactions involving purely domestic parties. Furthermore, governments
should not discriminate on the basis of nationality, public or private-sector
status of the firm, or the final destination of natural gas in granting access
to excess pipeline capacity nor in what is charged for use of those pipelines.
Governments should also promote transparent methods for communicating
data and information on the natural gas markets, pipeline capacity, and past
transaction history. Finally, there is an obligation to protect consumers from
monopolies, oligopolies, or other abusive practices that may arise when a
company dominates the local market, as well as from bad service.
Unfortunately, CMC Decisions 10/98 and 10/99 have joined the huge back-
log of Decisions, Resolutions, and Directives issued by Mercosur’s institutional
bodies over the years that have never been ratified by all four member states.
Accordingly, neither of these two Decisions are enforceable legal obligations.
In any event, Argentina may already have been in violation of Decision
10/99 when it was signed, as a single company (i.e. the formerly state-owned
Yacimientos Petrolíferos Fiscales or YPF) already controlled at least 60 per cent
of Argentine natural gas production and 80 per cent of the country’s natural
gas sales. A high level of reserves in the hands of one company can act as a
barrier to the entry of potential competitors and prevents existing producers
from increasing their share of sales by lowering prices because the dominant
company can agree with large customers to meet the competition’s lower
prices, a practice that YPF engaged in throughout the 1990s (see Bonderovsky
and Petrecolla, 2002, pp. 110, 114).
The policies that successive Argentine governments have followed since the
country’s economic implosion of 2001–2 are clearly incompatible with
the provisions contained in both Mercosur Decisions on electricity and
natural gas. For example, since 2004 the Argentine government has severely
disrupted natural gas exports to Brazil, Chile, and Uruguay in favour of
domestic users. In March 2005, the Argentine government even balked at a
Brazilian request to purchase Argentine electricity that would be funnelled
through the conversion plants in Garabí (just over the border in the Brazilian
State of Rio Grande do Sul). It was only after Brasilia reminded its counter-
parts in Buenos Aires that it might adopt a similarly truculent attitude if
Argentina ever needed electricity later in the year, during its peak-demand
winter season, that Argentina backed down.
The North America Free Trade Agreement (NAFTA) has had a direct impact
on the energy sector in Canada, Mexico, and the US. The countries are
prohibited from levying export taxes on energy goods (including oil and
natural gas) or charging a higher price for them than they are sold for in
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Thomas Andrew O’Keefe 103
the domestic market. Furthermore, Canada and the US are also required to
maintain energy shipments to each other at the same proportion vis-à-vis
domestic sales as during the preceding three years regardless of any global
energy crisis that might otherwise serve as an excuse to interrupt supplies
(see Johnson, 1994, pp. 114–5, 206).8 NAFTA Section 606(2) also obliges the
Federal governments in Canada, Mexico, and the US to ‘seek to ensure’ that
regulatory bodies within their national territory avoid disrupting contractual
relationships when applying energy measures.
Mexico specifically exempted itself from NAFTA provisions, otherwise
applicable to Canada and the US, that allow private or foreign participation
in the exploration, production, and refining of oil and natural gas. However,
Mexico permits limited participation in the transport and distribution of
natural gas as well as in the generation, cross-border transmission, and sale of
electricity by investors from Canada or the US (ibid., pp. 312–13).9 In doing
so, investors from Canada and the US are protected by NAFTA’s investment
provisions (including its separate dispute resolution mechanism). Similarly,
the Multi-Service Contracts – used by PEMEX since the late 1990s to attract
private participation in its hydrocarbon industry by paying private firms a set
fee for defined exploration and drilling work – are subject to NAFTA’s govern-
ment procurement provisions when the firms are from Canada or the US.
Building on the precedent for trilateral energy cooperation established by
the NAFTA, a North American Energy Working Group (NAEWG) was estab-
lished in 2001 with mid-level officials (as opposed to cabinet level represen-
tatives) from Canada, Mexico, and the US. An ad hoc subgroup of experts
was also established to collect statistics and advise the NAEWG on matters
directly related to electricity, energy efficiency, hydrocarbons in general,
natural gas trade and interconnections, nuclear power, oil sands, energy
regulation, and science and technology. The primary goal of the NAEWG was
to enhance the sharing of information among the three governments so as
to improve cross-border trade in energy. Although the NAEWG established
agreements on conservation programmes and efficiency targets for a variety
of equipment and appliances, some observers feel that its effectiveness was
undermined by excessive secrecy and a generalized failure to include private-
sector input (Dukert, 2007, pp. 134, 152).
In 2005 the heads of state of Canada, Mexico, and the US met in Waco,
Texas and launched the Security and Prosperity Partnership (SPP). The
NAEWG was folded into the SPP as its working group on energy issues.10 In
addition, senior-level officials with direct responsibility for their country’s
energy portfolio would now represent each government on NAEWG. In
response to the criticism levelled at the old NAEWG, the working groups
under the SPP are required to regularly consult ‘stakeholders’ including state
and provincial government officials, the private sector, and non-governmental
organizations. Since it was folded into the SPP, the biggest success story of
the NAEWG has been the development of an adequate system of receiving
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104 Energy and Climate Partnership for the Americas
facilities for Liquefied Natural Gas (LNG) and supporting infrastructure for
LNG distribution in re-gasified form, as well as the harmonization of rules for
the licensing, issuing of permits, and oversight of the energy sector (ibid.,
pp. 152–3). The more important SPP mandate for designing a common policy
framework for energy issues in North America, however, remains hamstrung
by internal Mexican political constraints that prevent that country’s federal
government from opening its hydrocarbons sector to private enterprise or
eliminating price controls that subsidize consumer petroleum purchases.11
At the North American Leaders Summit in Guadalajara on 9–10 August
2009, Presidents Obama of the US and Felipe Calderón of Mexico along with
Prime Minister Stephen Harper of Canada announced a number of energy
and climate change-related initiatives, including a North American Carbon
Capture and Storage Partnership,12 trilateral efforts to reduce unnecessary
natural gas flaring, enhanced collaboration in devising a harmonized frame-
work on energy efficiency standards, and cooperation in the research and
development of clean energies (including devising smart grid inter-operability
standards). By far the most interesting development, however, was the deci-
sion by the three governments to continue working on energy-related issues
within the SPP framework given previous criticism in Canada and the US
about its alleged democratic oversight deficiencies.
In addition to the initiatives arising under the NAEWG/SPP, Canada
and the US are also engaged in a Clean Energy Dialogue launched when
President Obama visited Ottawa in February 2009.13 This bilateral initiative
produced an Action Plan in September 2009 which calls for a number of
joint efforts related to carbon capture and storage, expanding and modern-
izing the cross-border electricity grid through, inter alia, use of smart grid
technologies and greening the electricity supply, and clean energy research
and development. Among the specific collaborative projects proposed for
immediate launching are those related to sustainable bioenergy, lifecycle
analysis, production of biofuels using algae and mountain-pine-beetle-killed
trees, development of lightweight materials for vehicles, and tools optimizing
energy efficiency.
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Thomas Andrew O’Keefe 105
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106 Energy and Climate Partnership for the Americas
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Thomas Andrew O’Keefe 107
in place that work with micro as well as small and medium-sized enterprises
to enhance energy efficiency and encourage greater use of renewable energy
resources.
Using the Andean Community to serve as a regional stepping stone in the
construction of an Energy and Climate Change Partnership of the Americas
is unlikely to bear much fruit. For one thing, the trade bloc is riddled with
serious internal cleavages (between Bolivia and Ecuador on the one hand,
and Colombia and Peru on the other) regarding the most appropriate poli-
cies for achieving economic development and interacting with the global
marketplace. The withdrawal of Venezuela from the Andean Community in
2006 also diminishes the usefulness of working through this economic inte-
gration project. Furthermore, the Andean Community’s impact on integrating
the energy sector regionally has been minimal. For its part, Mercosur has
shown itself incapable of providing a minimum of energy security within
the Southern Cone. Accordingly, in the case of South America, it makes
better sense to use the Unión de Naciones Suramericanas (UNASUR) as the
regional grouping around which to build an energy cooperation and climate
change framework that can later be incorporated into a hemispheric effort.
Officially launched in May 2008, UNASUR seeks to integrate South
American energy markets and address climate change issues. UNASUR also
supports initiatives to develop alternative and renewable sources of energy
and promote the efficient use of all types of fuels. A big advantage of working
through UNASUR is that Brazil and Venezuela are both active members.
Another advantage is that UNASUR includes two CARICOM member states:
Guyana and Suriname. This link can be used to coordinate efforts at energy
and environmental cooperation among both regional groupings.
Conclusion
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108 Energy and Climate Partnership for the Americas
like Hugo Chávez in Venezuela, Evo Morales in Bolivia, and Rafael Correa in
Ecuador emerged to challenge purely market-oriented models as incompatible
with sustainable economic development. Further poisoning the atmosphere
was a Bush White House that continuously disregarded international law and
even invaded a sovereign nation, reviving memories of an imperialistic US
plaguing its southern neighbours with frequent interventions under the guise
of promoting ‘freedom’.
Developing and subsequently facilitating trade in renewable energy resources,
ensuring reliable access to conventional fuels, and reducing the harmful impact
of greenhouse gas emissions is probably one of the few areas where a consensus
can be achieved among the governments in the Western Hemisphere today.
For reasons previously explained in more detail, however, the Obama admin-
istration is beset by pressing foreign and domestic crises that prevent it from
taking the lead in forging a hemispheric initiative that would ensure all three
objectives. Further complicating matters is the fact that governments in the
Americas are no longer united around a single economic vision as may have
been the case in the 1990s. Hence actual or potential energy power houses like
Brazil, Canada, Trinidad and Tobago, and Venezuela are going to have to take
up the leadership mantle within their own respective regions if the concept of
an Energy and Climate Partnership of the Americas is ever to prosper.
Notes
1. Although the high prominence given to energy and the environment at the Fifth
Summit of the Americas in Port-of-Spain was new, both issues had previously
appeared on the official agendas of the first three Summits as well as a Special
Summit on Sustainable Development held in Santa Cruz, Bolivia in December 1996.
For example, the Plan of Action issued at the First Summit of the Americas in Miami
acknowledged that ‘[s]ustainable economic development requires hemispheric coop-
eration in the field of energy’ and launched a Partnership for Sustainable Energy
Use, a Partnership for Biodiversity, and a Partnership for Pollution Prevention.
Based on the mandates of the 1994 Miami Summit, a Hemispheric Energy Initiative
focused on the regional integration of energy markets and developing policies to
facilitate private-sector investment in the energy sector was formally launched in
1995. By 2002, the three partnerships as well as the Hemispheric Energy Initiative
had collapsed into oblivion.
2. A press release put out by the White House on 19 April 2009 noted only that
‘President Obama invited countries of the region to participate in an Energy and
Climate Partnership of the Americas; a voluntary and flexible framework for advanc-
ing energy security and combating climate change’.
3. The Obama White House also needs to resolve a turf battle between the State
Department and the Department of Energy as to which agency will have primary
jurisdiction over international energy cooperation and climate change initiatives.
4. The current 15 CARICOM member states include: Antigua and Barbuda, the
Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat,
St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, and Trinidad
and Tobago.
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Thomas Andrew O’Keefe 109
5. One veiled threat initially made by Trinidad’s Prime Minister Patrick Manning to
persuade CARICOM member states not to sign on to Petrocaribe was the sugges-
tion that if they did, his country would be forced to seek extra-regional markets
and ‘guarantees could not be offered to countries attempting to resume buying
oil and petroleum products from T&T if the Petrocaribe arrangement eventually
faltered’ (Bryan, 2007, pp. 383–4).
6. Renewable energy resources include: wind, hydro, biomass (including bagasse
and other agricultural residues, landfill gas, solid waste, and cellulose), biofuels
(including ethanol and bio-diesel), solar energy, and geo-thermal.
7. Cross-border trade in electricity in 2007 represented less than 1 per cent of total
available supply in Central America (see Center for International Governance
Innovation, 2009, pp. 10, 12).
8. From 1973 to 1980, Canadian exports of crude oil to the US were significantly
reduced without any domestic cutbacks. (ibid., pp. 206). As a result of the NAFTA,
Canada can now only reduce shipments to the US in proportion to domestic
cutbacks. Mexico specifically exempted itself in the NAFTA from making any pro-
portionality commitments with respect to trade in energy and basic petrochemical
goods with either Canada or the US.
9. In general, the generation of electricity by foreign investors must be for their
own use (with any excess sold to the Mexican state electricity monopoly CFE), as
part of a co-generation arrangement with CFE, or strictly for export. Interestingly,
the exploitation of radioactive minerals and the generation of nuclear energy in
Mexico are also reserved for the state.
10. Other working groups under the SPP were entrusted with looking at business
facilitation, electronic commerce, environmental issues, financial services, food
and agriculture, manufactured goods, rules of origin, and transport.
11. Recent Mexican presidents have not been able to amend Mexico’s Constitution,
which puts ownership of the country’s hydrocarbons exclusively in the Mexican
nation since the petroleum industry was nationalized in 1938. To pass a constitu-
tional amendment requires two-thirds of the votes of the federal congress as well
as a two-thirds vote in each of the state legislatures (Morales, 2007, p. 26). Attempts
to get around constitutional restrictions by permitting joint ventures or strategic
alliances with private-sector companies have been systematically blocked as well.
12. As a result of this initiative, the three governments have agreed to produce a North
American Carbon Atlas that will result in uniform mapping methodology data sharing
with respect to major sources of carbon emissions and potential storage sites.
13. Following Obama’s visit, three bilateral government working groups were formed
to identify key opportunities for joint collaboration in: developing and deploying
clean energy technologies; building a more efficient electric grid based on clean and
renewable generation; and expanding clean-energy research and development.
14. Research conducted by two Stanford University law professors in 2008 found
that a large fraction of the credits generated under the CDM did not represent
genuine reductions in greenhouse gas emissions as many projects that ‘reduce’
emissions would have been built anyway and at a far lower cost as well. Even
worse, the CDM creates perverse incentives for developing countries to increase
carbon emissions as a way of generating CDM credits that can then be offered to
developed nations desperate to find offsets for their pollution-inducing activities
(see Wara and Victor, 2008).
15. Canada and Mexico are the two top sources of US petroleum imports. Canada and
the United States swap more electricity in a typical year than some South American
countries produce. In fact, the electricity grids in some Canadian provinces are
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110 Energy and Climate Partnership for the Americas
actually synchronized with those in US states, rather than with adjacent prov-
inces (Dukert, 2007, p. 136).
16. This may also explain why the US is pursuing the Clean Energy Dialogue with
Canada despite the fact that the objectives and programmes of this bilateral ini-
tiative are almost identical to those supposedly being pursued trilaterally under
the SPP.
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Studer, Isabel and Carol Wise (eds) (2007) Requiem or Revival: The Promise of North
American Integration. Washington, DC: Brookings Institution Press.
Wara, Michael and David G. Victor (2008) ‘A Realistic Policy on International Carbon
Offsets’. Program on Energy and Sustainable Development Working Paper # 74. Palo Alto:
Freeman Spogli Institute for International Studies, Stanford University. Available
at http://fsi.stanford.edu/publications/a_realistic_policy_on_international_carbon_
offsets/.
Shaw
6
Demise of the Inter-American
Democracy Promotion Regime?
Thomas Legler
During the 1990s, the member states of the OAS constructed a new regime
to protect democracy from threats of authoritarian reversals. The foundation
of the regime was a set of international legal pillars, including the Protocolo
de Cartagena de Indias (1985), Resolution 1080, the Washington Protocol
(1992/1997) and the Inter-American Democratic Charter (IADC, 2001). It was
put to the test on numerous occasions with varying results: Bolivia (2003,
2005, 2008), Ecuador (1997, 2000, 2005), Guatemala (1993), Haiti (1991–4,
2000–5), Nicaragua (2005), Paraguay (1996, 1999), Peru (1992, 2000), and,
Venezuela (1992, 2002).
Recent developments in the Americas may call into question the future of
the inter-American democracy promotion regime. Democracy no longer seems
a membership requirement for participating in a number of the region’s new
and existing multilateral forums. Despite the persistence of its authoritarian
regime, Cuba has become a member of the Rio Group, the Latin American
and Caribbean Summit (CALC), and the Community of Latin American and
Caribbean States. In 2009, a sizeable number of Latin American and Caribbean
member states pushed for Cuba’s reintegration into the OAS and the Summits
of the Americas. Even though provisions exist in the Democratic Charter, the
OAS has also been unable and/or unwilling to respond adequately to repeated
instances of ‘authoritarian backsliding’ by member state governments,
including at various moments Ecuador, Nicaragua, and Venezuela. Until the
Honduran coup d’état in June 2009, the OAS encountered considerable diffi-
culty in invoking the Inter-American Democratic Charter (IADC) either to pre-
vent or respond to political crises where democracy was clearly under threat. In
the case of Honduras, in spite of unprecedented international condemnation,
isolation, and sanctions, the OAS and the international community failed to
overturn the 28 June coup and restore ousted President Manuel Mel Zelaya to
office. As if that were not enough, the OAS vision of representative democracy
has been challenged by participatory and plebiscitary alternatives.
Are we witnessing the demise of the inter-American democracy promo-
tion regime? I argue that it is premature to talk of regime decline. Rather,
111
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112 Demise of the Inter-American Democracy Promotion Regime?
An anti-coup norm
In contrast to the Cold War, coups or self-coups were no longer acceptable
or legitimate forms of political change in the Americas, and became subject
to international condemnation and various forms of soft and hard interven-
tion (Legler and Tieku, 2010). This norm was reflected in the creation of
Resolution 1080 (1991) and the Washington Protocol (1992/1997) as well
as strong collective responses by the OAS to real or attempted coups and
self-coups in Guatemala (1993), Haiti (1991), Paraguay (1996), Peru (1992),
and Venezuela (1992).
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Thomas Legler 113
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114 Demise of the Inter-American Democracy Promotion Regime?
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Thomas Legler 115
Executive sovereignty
In conjunction with the ‘by invitation only’ norm, the inter-American
democracy promotion regime reinforces a particular, élitist style of sov-
ereignty: executive sovereignty (Cooper and Legler, 2006; Legler 2007,
Committee on Foreign Relations 2010). That is, as practised in inter-American
diplomacy, sovereignty resides in a head of state or government or his/her
designated diplomatic representatives. Despite occasional rhetoric, it is not
a popular sovereignty, nor is executive sovereignty shared among the presi-
dent/prime minister, judiciary, parliament, and other branches of the states.
The IADC is an instrument at the exclusive disposal of national leaders. It is
a democratic sovereignty only in so far as these leaders are elected and held
accountable through elections.
An important implication of the inter-American tradition of executive
sovereignty is that the Secretary-General of the OAS has a very limited scope
for action independent of the General Assembly and Permanent Council in
defending democracy. As Chapter XVI of the OAS Charter indicates, he is
responsible to the General Assembly in the fulfilment of all his obligations
and functions.
The IADC operative clauses did enhance the good offices of the Secretary-
General, in the sense that Articles 17 and 18 outline a role for him in preven-
tive diplomacy. Nonetheless, it is noteworthy that the execution of his good
offices in this regard requires the express consent of the member state and,
more narrowly, its head of state or government. Article 20 also authorizes
the Secretary-General to convene a meeting of the Permanent Council in the
event of ‘an unconstitutional alteration of the constitutional regime that seri-
ously impairs the democratic order in a member state’. Importantly, it is the
Permanent Council that ultimately decides or pre-vets any course of action
to be taken, reaffirming that any good offices which the Secretary-General
wishes to undertake must await a green light from his state masters.2
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116 Demise of the Inter-American Democracy Promotion Regime?
arose. The regime was originally constructed during the 1980s and 1990s in
a propitious environment that included the end of the Cold War and the
Third Wave of democratic transitions. With the threat of authoritarian rever-
sals still very real in many countries, the elected leaders of Latin America’s
new democracies had a keen interest to project their new democratic values
through their foreign policies, as well as to create multilateral bulwarks as an
additional line of defence to help them lock in their new democratic con-
stitutional orders.3 The rise of democracy promotion also occurred against a
backdrop of dynamic hemispheric regionalism and a growing consensus con-
cerning how representative democracy was defined and practiced. Finally,
the OAS itself underwent an important revival under the capable leadership
of Secretary-General César Gaviria (1994–2004).
The new millennium has been an altogether different story. As elabo-
rated below, the terrain for consolidating the regime became much more
difficult.
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Thomas Legler 117
Another recent development has been the emergence of political crises that
are not just narrow intra-élite conflicts but also society-wide processes of
intense political and social polarization. Conflicts in Venezuela, Bolivia,
Ecuador, and Honduras have assumed this form. Acute polarization leads
to the construction of two opposing sides, each with a collective identity
formed in mutual antagonism with the other. One pole assumes the identity
of ‘el pueblo’ (the hitherto oppressed or excluded), and the other perceives
itself as the guardian of the status quo ante and/or opposition to the dicta-
torial projects of Chávez, Morales, Correa, and Zelaya. Both sides come to
perceive a zero-sum situation or existential struggle for survival at all costs.
Politics in these contexts abruptly departs from existing rules of the political
game, abandoning dialogue, tolerance, and political concertation for political
confrontation, intolerance, mobilization, and even violence. In other words,
politics becomes a battlefield where only one side can win and the costs of
losing for either side are unacceptable.
It is worrisome that, for both sides, the ends of political actions can come
to justify the means employed. Democracy can become the victim in these
struggles. As illustrated by the coups in Venezuela (2002) and Honduras (2009),
citizens who would never normally have supported such anti-democratic
actions came to defend them as necessary evils to eliminate those whom they
perceived as threatening their very existence. For their part, locked in bitter
class and ethnic or racial conflict, the leaders of these countries and their fol-
lowers have resorted to growing human rights abuses to advance their causes.
Needless to say, the proposition of defending democracy in these contexts
becomes a real headache. The two sides in these internal conflicts extend
their polarizing logic to their relations with external actors like the US, the
OAS, and the European Union: assuming that these actors are either for or
against their cause. It therefore becomes difficult for international actors to con-
vincingly maintain a stance of impartiality or neutrality. As we shall see below
in the recent case of the 2009 Honduras coup, punitive measures applied in an
intensely polarized context can be counterproductive, as the mutual perception
of a high-stakes, zero-sum struggle makes the option of making concessions
virtually impossible. With the erosion of tolerance, respectful debate, and the
perception of common ground or destiny in society, it becomes even more
difficult for the OAS to promote effectively its preferred diplomatic tool in
crises contexts: the facilitation of intra-élite democratic dialogue processes.
If the defence of democracy were not sufficiently complicated beforehand,
now the OAS and the international community must confront the additional
challenge of how to address and diffuse polarization.
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118 Demise of the Inter-American Democracy Promotion Regime?
as was the case during the previous decade. Democracy is a socially and
politically contested concept subject to change (Grugel, 2002). On the one
hand, the social construction of democracy on the ground in diverse direc-
tions in recent years is a healthy phenomenon. As the UNDP signalled in
2004, real existing democracy in the region was very problematic, a ‘democ-
racy without citizenship’ in its terms. The participatory and/or plebiscitary
alternative as it has evolved in Venezuela, Bolivia, Ecuador, and elsewhere, has
put democratic citizenship and the fight against poverty and social exclusion
squarely on the agenda.
On the other hand, the lack of élite and popular consensus on the meanings
and practices of democracy obviously makes it harder for the international
community to defend or promote democracy. For example, the separation of
powers is a staple of the representative democracy tradition. It is not neces-
sarily the same case with the plebiscitary and participatory model of democ-
racy espoused by Chávez. Democracy à la Chávez, et al. is notoriously critical
of what is perceived as the élitist representative function characteristic of
representative or liberal democracy (Canovan, 1999; Decker, 2003; De la Torre
and Peruzzotti, 2008; Panizza, 2005). The Chávez alternative eliminates or
weakens institutional mediation between citizens and the executive, creating
more direct links between voter and elected leader. As Seligson (2007, p. 93)
recently found, two-thirds of recent AmericasBarometer respondents across
Latin America indicated that they would accept the kind of reduction of the
autonomy of the judiciary, legislature, and opposition parties undertaken by
Chávez. Therefore, whereas the erosion of horizontal accountability appears
as authoritarian backsliding in Venezuela from a US or Western perspective,
it is not necessarily so from other alternative democratic logics. Indeed,
electoral irregularities notwithstanding, leaders in Venezuela, Ecuador, and
Bolivia can point to the heightened frequency of plebiscites in their countries
as ample evidence of their democratic credentials.
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Thomas Legler 119
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120 Demise of the Inter-American Democracy Promotion Regime?
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Thomas Legler 121
the 1962 decision to suspend Cuba, leaving the door open for Cuba’s return
to the organization, should it so desire. The OAS also suffers a chronic
fiscal crisis that limits its ability to fulfil its enormous number of mandates
(Committee on Foreign Relations, 2010).
Part of the blame for the OAS’s current woes must also be attributed to
questions concerning the leadership of its Secretary-General. Although
admittedly he has had to negotiate difficult waters between the US and its
various Latin American adversaries, he has failed to invigorate the OAS as
his predecessor Gaviria did in his time. Indeed, for much of his initial term it
was widely speculated that he was more concerned with positioning himself
as a candidate to succeed President Bachelet in Chile than running the OAS
as it needed to be run. A surprising editorial by the Washington Post depicted
Insulza as the embodiment of the OAS’s dysfunction and accused him of
being intentionally soft on anti-democratic actions by leftist presidents
Chávez and Zelaya (Washington Post, 2010).
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122 Demise of the Inter-American Democracy Promotion Regime?
out the red carpet for Iranian dictator Mahmoud Ahmadinejad on an official
state visit. Moreover, as Oppenheimer queried, ‘how can Lula da Silva call
for maintaining international sanctions against Honduras while at the same
time urging the world to lift remaining sanctions against Cuba?’
Additionally, the strength of the anti-coup conviction within the inter-
American and wider international community seemed to dissipate as the
Micheletti Government persistently clung to power and as the 29 November
general elections approached. By the time the elections were held, the
original inter-American anti-coup consensus had split into two groups: a hard-
line group containing Brazil, Venezuela, Bolivia, Ecuador, Paraguay, and
Nicaragua that insisted on not recognizing the 29 November elections since
Zelaya had not been restored to office, and a soft-line group including the US,
Costa Rica, Colombia, Guatemala, and Panama that viewed the elections as a
democratic exit from Honduras’s political crisis and intended to recognize the
elections even if Zelaya were not reinstated. According to Raúl Benítez (2009),
the Honduras debacle represented the triumph of realism over principles, as
countries of the Americas invariably weighed how their national interests
were affected.
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Thomas Legler 123
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124 Demise of the Inter-American Democracy Promotion Regime?
on the meaning and practices of democracy in the region, it is not likely that
this norm will be strengthened any time soon.
It is also possible that the problematic nature of this norm might have an
experiential and intercultural explanation. That is, from the perspective of
Latin American leaders such as Insulza or Lula, who personally endured and
suffered military dictatorships, situations that the US describes as authori-
tarian backsliding fall far short of the brutal reality of military dictatorships
of yesteryear, and, accordingly, do not warrant the same concern as military
coups. Additionally, the self-interest of political leaders may well help explain
the reluctance of many to put international constraints on their own political
room for manoeuvre.
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Thomas Legler 125
Interestingly, the OAS employed sticks first and then turned to carrots
afterwards. Just days after Honduras was suspended from the organization,
the US government, the OAS Secretary-General, and SICA decided to opt for a
negotiated solution to the conflict, probably sensing the determination of the
de facto Micheletti Government to resist international diplomatic isolation
and sanctions. Since Insulza’s credibility in Micheletti circles was badly damaged
thanks to his association with the OAS’s suspension of Honduras as well as
his support for the restoration of Zelaya, these actors turned to Costa Rica’s
Nobel laureate President Oscar Arias to foster dialogue between Micheletti
and Zelaya. In the end, neither punitive sanctions nor dialogue were able to
restore Zelaya to power during the remainder of his presidential term.
As both Peter Hakim (2009) and Michael Shifter (2009) stressed, inter-
national punitive measures can be very counterproductive in polarized
contexts. Instead of weakening the Micheletti government and its support,
they argued that the use of such measures actually served to harden posi-
tions on both sides. International condemnation, sanctions, and diplomatic
isolation actually strengthened the resolve of the de facto government and
its supporters.
Even so, Hakim’s suggestion (2009) that negotiations might have been a
more appropriate course of action immediately following the coup is also
problematic. OAS or international-facilitated dialogue between Zelaya and
Micheletti from the outset could also have been counterproductive in the
sense of awarding political legitimacy to the latter after having participated
in a coup. While Hakim is correct in signalling the potential for strong-
handed international measures to be counter-productive, he neglects the
moral hazard that comes with fostering negotiations with coup mongers.
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126 Demise of the Inter-American Democracy Promotion Regime?
to the OAS. It is possible that, through Article 18, embattled Bolaños wished
to signal to his powerful foes Ortega and Alemán that he could count on
important international support for his cause.
Honduras’s President Zelaya formally invited the OAS to lend its assis-
tance in addressing the mounting crisis his government faced. For the first
time, Article 17 of the IADC was invoked in Permanent Council Resolution
952 (OAS, 2009c). Sadly, Zelaya’s turn to the OAS for help on 26 June proved
too little too late, as he was ousted in a coup d’état just two days later.
Executive sovereignty
During the period 2001–10 there were signs of both the executive sover-
eignty phenomenon’s persistence as well as the possibility of more inde-
pendence for the Secretary-General vis-à-vis his state handlers. On one
side, Secretary-General Insulza (2007, pp. 14–15) recently lamented the
persistence of this diplomatic norm and its negative effect on implement-
ing the Democratic Charter. To paraphrase the Secretary-General, no state
power other than the executive can invoke the IADC, much less civil society
organizations.
The 2009 Honduras saga confirmed that the IADC is an instrument whose
recourse is limited exclusively to heads of state and government. Long
before the 28 June coup took place, a growing number of other govern-
mental bodies voiced their concerns about alleged democratic transgressions
by President Zelaya and an alarming process of political polarization in the
country. Perhaps, had the Honduran Supreme Court or Congress been able
to invoke the IADC, the outcome of the mounting crisis in that country
might have been much different.
On the other side, General Assembly Resolutions 2154 and 2251 poten-
tially enhanced the Secretary-General’s role in defending democracy. In its
third operative clause, Resolution 2154 reaffirmed that ‘the Secretary General
may bring to the attention of the Permanent Council, in the exercise of the
authority contained in the OAS Charter and pursuant to the Inter-American
Democratic Charter, those situations likely to lead to action under the said
Charters’.. Resolution 2251 employed virtually identical words.
Nevertheless, Secretary-General Insulza has yet to test this new prerogative.
In a scathing critique of his immobilism, CNN en Español newscaster Patricia
Janiot took issue with Insulza for not once bringing to the attention of the
Permanent Council the worsening political repression of dissidents and the
erosion of the separation of powers by the Chávez Government in Venezuela
as had been recently reported by the Inter-American Commission on Human
Rights (IACHR, 2009). In a convenient separation of human rights and
democracy, Insulza responded by stating that human rights were the jurisdic-
tion of the Inter-American human rights system, not the Permanent Council.
He also remarked that the Secretary-General’s role is to carry out resolutions
of the OAS’s 34 member states, thereby reaffirming executive sovereignty.7
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Thomas Legler 127
Conclusions
The preceding analysis suggests that there has been regime change, but that
there have been conflicting signals about the direction of that change. The
relative expedience with which the democratic membership criterion was
put aside in the interest of the reintegration of Cuba into the inter-American
system is a cause for concern. So too is the facility with which the external
validation norm can be avoided by countries in which electoral irregularities
occur, by simply not inviting OAS electoral observation missions. Additionally,
representative democracy is no longer hegemonic in the Americas, making
the task of defending democracy even more difficult without a consensus on
the meaning and practices of democracy.
Other norms, such as the anti-authoritarian backsliding norm, have simply
failed to take hold, despite the best intentions of their norm entrepreneurs.
Similarly, various efforts have failed to create a peer review mechanism for
monitoring countries’ democratic performance.
Nonetheless, the experience of defending democracy in the new millen-
nium indicates that not all is gloomy. The anti-coup norm remains very
strong, although not completely unproblematic. After much previous criti-
cism for the difficulty in invoking the Democratic Charter, this document
was used as never before in responding to the Honduran crisis. Moreover,
the international response to the Honduran coup, in terms of international
isolation and sanctions, was the strongest yet.
When all these factors are taken into consideration, it is therefore prema-
ture to conclude that the inter-American democracy promotion regime is in
decline. It is more accurate to speak of the failure to consolidate the early
advances during the 1990s leading up to and including the Inter-American
Democratic Charter. Accordingly, the current state of the regime is one with
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128 Demise of the Inter-American Democracy Promotion Regime?
a limited but important mandate for countering coups and little else in
terms of consolidated norms and real capacities.
Is there hope in the future for the consolidation of a democracy promotion
regime that has a broader set of capabilities including effective preventive
diplomacy, combating authoritarian alterations by elected leaders, peer review,
and holding governments accountable for fraudulent elections? In this chap-
ter I have stressed the importance of the prevailing circumstances or condi-
tions in which regime development took place. Just at the moment when the
inter-American system finally had a comprehensive toolkit for defending and
promoting democracy via the IADC, dramatic contextual changes prevented
the consolidation of the regime. My analysis underscores the importance of
key factors for successful regime construction: an élite and popular consensus
on what is meant by democracy and how it is practised; favourable US–Latin
American relations and regionalism trends; and a healthy OAS with effective
leadership from its secretary-general. In hindsight, the synergy among these
factors during the 1990s is truly exceptional and striking. It is also note-
worthy how the contextual downturn of the new millennium not only hurt
the future prospects for regime consolidation but also the regime’s ability to
adapt to new challenges. Here I have highlighted new threats to democracy
that arose, such as executive–legislative and executive–judicial conflicts, as
well as new challenges for defending democracy caused by the phenomenon
of extreme polarization in many contemporary political conflicts. Given this
contextual significance, our best hope is to focus on how to make the terrain
for the defence and promotion of democracy more fertile.
Notes
1. On the evolution of OAS election monitoring, see Lean (2007) and Santa-Cruz
(2007).
2. It is instructive that weak secretariats with limited delegation of autonomous
prerogatives is common throughout much Latin American and Caribbean multi-
lateralism, and not just the OAS, reinforcing the idea of executive sovereignty as
a broader regional norm. This is a point that resonates throughout a forthcoming
special issue of Foreign Affairs Latinoamerica. See Legler (2010).
3. Similar to Moravcsik’s (2000) ‘lock-in’ thesis, the construction of the collective
defence of democracy regime signified the willingness of OAS member states to
surrender a certain amount of sovereignty to the OAS in exchange for the OAS’s
support to lock in their newly created democratic constitutional orders.
4. See Dan Erikson’s chapter in this volume for an exploration of this topic.
5. For Gaviria’s ideas and autobiography while serving as OAS Secretary-General, see
Gaviria (1995, 2004).
6. Perhaps part of the confusion is caused by the ongoing debate concerning which is
the appropriate foreign-policy approach to Cuba in order to foster political liberali-
zation and democratization: diplomatic isolation versus constructive engagement.
Interestingly, in recent years the European Union also shifted its approach towards
Cuba, replacing an earlier hardline tack with renewed engagement. The Obama
Shaw
Thomas Legler 129
administration has also made more moderate overtures toward the country in the
direction of greater engagement.
7. Patricia Janiot, Interview of OAS Secretary-General José Miguel Insulza, CNN en
Español, 28 March 2010.
References
Ayala Corao, Carlos and Pedro Nikken Bellshaw-Hógg (2006) Defensa colectiva de la
democracia: definiciones y mecanismos. Difusión de la Carta democrática Interamericana 5.
Atlanta and Lima: Carter Center and Comisión Andina de Juristas.
Benítez Manaut, Raúl (2009) ‘La crisis de Honduras y el sistema interamericano:
el triunfo del realism sobre los principios’, Foreign Affairs Latinoamérica 9, no. 4
(October–December): 75–84.
Canovan, Margaret (1999) ‘Trust the People: Populism and the Two Faces of Democracy’,
Political Studies 47 (1): 2–16.
Carter, Jimmy (2005) ‘The Promise and Peril of Democracy’, Keynote speech to OAS
Lecture Series of the Americas. Washington, DC, January 25.
Committee on Foreign Relations (2010) Multilateralism in the Americas: Let’s start by
fixing the OAS. Report to the Committee on Foreign Relations, United States Senate,
54–584 PDF. Washington, DC: US Government Printing Office, January 26.
Cooper, Andrew and Thomas Legler (2001) ‘The OAS Democratic Solidarity Paradigm:
Questions of Collective and National Leadership’, Latin American Politics and Society,
43 no. 1 (Spring), pp. 103–26.
Cooper, Andrew F. and Thomas Legler (2006) Intervention without Intervening? The
OAS Defence and Promotion of Democracy in the Americas. New York: Palgrave
Macmillan.
Decker, F. (2003) ‘The Populist Challenge to Liberal Democracy’, Internationale Politik
und Gesellschaft (International Politics and Society) 3: 47–59.
De la Torre, Carlos, and Peruzzotti, Enrique (eds) (2008) El retorno del pueblo: Populismo
y nuevas democracias en América Latina. Quito: FLACSO Ecuador and Ministerio de
Cultura.
Gaviria, César (1995) A New Vision of the OAS. Washington, DC: Organization of
American States, 1995.
Gaviria, César (2004) La OEA 1994–2004: Una década de transformación. Washington,
DC: Organization of American States.
Hakim, Peter (2009) ‘Honduras and the OAS’, Revista América Economía, August 3.
IACHR (2009) Democracy and Human Rights in Venezuela. OEA/Ser.L/V/II. Doc.54.
Washington, DC: Inter-American Human Rights Commission, December 30.
Insulza, José Miguel (2007) La Carta Democrática Interamericana. Informe del Secretario
General en cumplimiento de las resoluciones AG/RES. 2154 (XXXV-O/05) y AG/RES.
2251 (XXXVI-O/06). OEA/Ser.G CP/doc. 4184/07. Washington, DC: Organization of
American States, April 4.
Lean, Sharon F. (2007) ‘External Validation and Democratic Accountability’, in Thomas
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Legler, Thomas (2003) ‘Peru Then and Now: The Inter-American Democratic Charter
and Peruvian Democratization’, Canadian Foreign Policy 10, 3 (Spring): 61–74.
—— (2007) ‘The Inter-American Democratic Charter: Rhetoric or Reality?’ in Gordon
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130 Demise of the Inter-American Democracy Promotion Regime?
Shaw
7
A More Secure Hemisphere?
Rut Diamint
Introduction
The Dominican Republic in 1978 and Ecuador in 1979 were the countries
that started the third democratic wave in Latin America.1 So began a long,
difficult process of reforms of the political regimes, along with the demili-
tarization of neighbourly relations and the renewal of regional integration.
Hemispheric organizations and sub-regional mechanisms adapted to the
new rules that Juan Linz and Alfred Stepan (Linz and Stepan, 1996, p. 5)
called ‘the only game in town’: a spirit of cooperation based on democratic
principles and the effectiveness of international regimes.
In keeping with this spirit, the Organization of American States (OAS) –
created for the peaceful, democratic solution of inter-state conflicts –
implemented reforms in its organization while creating other instruments to
defend democracy. At the same time, security negotiations were established
at the sub-regional and bilateral levels (see Appendix).
For some time, several Latin American countries had expressed their
disagreement with the Inter-American Treaty of Reciprocal Assistance
(ITRA), the Inter-American Defense Board (IADB) and the corresponding
Inter-American College of Defense (ICD), alleging that they did not con-
stitute effective tools for coping with a new stage of cooperation and
democratization (Diamint, 2001; Radseck, 2004). From 1995 onwards, the
OAS attempted to adapt the logic of the Cold War to the new period of
expansion of democracies.
The Hemispheric Security Commission, Resolution 1080, and the Unit
for the Promotion of Democracy were therefore set up. These were followed
by the Inter-American Democratic Charter and several resolutions and dec-
larations. All these are reflections of a different will to achieve hemispheric
cooperation.
Were these reforms effective in administering hemispheric security? Have
they succeeded in dealing with the risks and threats faced by the continent?
This chapter addresses these questions. It begins with a brief reference to the
131
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132 A More Secure Hemisphere?
OAS reforms since the end of the Cold War. The second section analyses
the new security concepts and their impact on the hemisphere. The third
describes the contradictions that arose as a result of crime fighting. To this
end, three topics will be explored: first, the logic of repression; second, the
lack of political will of leaders; and third, the false dichotomy of favouring
order over security. The fourth point presents the constraints experienced
by the OAS in solving security problems between incomplete states. The last
section concerns the title of this chapter and addresses whether or not the
changes discussed have made the region safer.
A destructured structure
Recurrent internal political crises combined with pressure from the US during
the Cold War had eroded the OAS’s effectiveness and credibility. The organi-
zation’s inability to respond to the Central American conflicts of the 1980s,
its refusal to have anything to do with the War of the Malvinas and its do-
nothing policy towards Cuba, and the US intervention in Grenada in 1983
and Panama in 1989 were signs that revealed the organization’s uselessness.
The persistence of the principles of sovereignty and non-interference in the
internal affairs of other states dominated hemispheric relations, restricting
the organization’s actions.
During the 1980s, Latin America had more faith in its own resources to
solve its problems than in the mediation of an institution dominated by the
US. This was the philosophy behind the Contadora agreement, the alliance
between the Rio Group and the European Union2 and Mercosur, which
created covert competition with the OAS. George H. W. Bush, realizing
the importance of rescuing the hemisphere, encouraged the Enterprise
for the Americas Initiative and attempted to strengthen the OAS.
The OAS’s legal instruments for establishing peace have been overtaken by
events. The Treaty of Reciprocal Assistance developed under the precepts of
the Second World War and the bipolar confrontation of the Cold War. The
Bogota Pact included the principles of the United Nations charter regarding
mediation, conciliation, arbitrage, and the pre-eminence of international
law but was only ratified by 14 countries and never achieved the legitimacy
of the UN. Years later, the 1991 reforms (the Declaration of the Collective
Defense of Democracy or Santiago Declaration, the 1080 Resolution, and
the Democracy Promotion Unit [DPU]) were the expression of a new form
of liaison between countries in the Western Hemisphere that prefigured a
new period of hemispheric relations.3
The Inter-American Convention against Terrorism (ICTE) was created in
1999 on the basis of an Argentine proposal after the terrorist attacks on the
Israeli Embassy (1992) and the Argentinean Israeli Mutual Association
(AIMA) of 1994; the Inter-American Convention Against the Illicit Manu-
facturing of and Trafficking in Firearms, Ammunition, Explosives, and other
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Rut Diamint 133
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134 A More Secure Hemisphere?
A few years after the transition to democracy and in the midst of the convic-
tion that coups d’état staged by the armed forces were unlikely to succeed,4
security concerns led to other issues. In 2003, a Security Conference was held
where a new hemispheric frame of reference was expected to be achieved to
jointly deal with the problems of defence and public order.
There was division between OAS members regarding their security
priorities and, therefore, about the main missions of their armed forces.
This disparity was reflected in the Final Declaration of the Special Security
Conference in Mexico, which ended up as a long shopping list that did little
to coordinate the extremely diverse needs and concerns of the states of the
continent. It was a complex agenda that reflected the different realities of
each of the subregions.
The crux of the debate was the overlapping of external defence and
public security tasks. Some representatives argued that the sharp division
between the two fields had been blurred. Separation was a requirement
during the time of the transition to democracy to ensure that the military
did not threaten their own citizens. This situation belonged to the past.
In response to the emergence of armed players that were neither terrorist
groups nor national armed forces (such as gangs, drug traffickers and organ-
ized crime), it was necessary to defend the political stability of nations by
resorting to the state’s instruments of defence.
Other countries rejected the overlapping of public-order affairs with
those of defence, which was activated by the US desire to redirect Latin
American armed forces towards the job of combating drug trafficking, strictly
in keeping with its own interests: ‘calling for cooperation between regional
partners whilst at the same time identifying crucial security matters from an
exclusive and very narrow American point of view’ (Varas, 2008, p. 6). This
particular point of view translated into an obvious interest in modifying
military roles towards police tasks by preparing Latin American armed forces
for the fight against drug trafficking and radical rebel groups (Withers et al.,
2008).5 To this end, as the Washington Office on Latin America (WOLA)
points out, ‘The United States funded the training of 13,076 Latin American
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136 A More Secure Hemisphere?
that meet the needs of citizens and the state. The SSR includes all the
organizations that have the authority to use and order the use of force,
or the threat of force to protect individuals, groups, and the state: security
forces, the judicial and penitentiary system, the armed forces, and the state’s
foreign policy. This covers four types of global response: political (demo-
cratic control mechanisms of the security sector); institutional (reform of
state institutions); economic (support reforms using economic resources);
and social (call on society to support security sector reforms). This approach
acknowledges the fact that democracy depends as much on development,
the consolidation of peace, and democratization as on the rule of law
and the state’s capacity for democratic control (Schnabel and Ehrhart,
2005, pp. 1–16; Ball and Brzoska, 2004). Although the concept has been
accepted, particularly in the European Union, to improve stability in Africa,
it has been less used in the Latin American context. The case of Haiti is the
only one in which developed cooperating countries promote SSR ideas. But
within the sphere of the OAS, although its criteria were debated, it did not
lead to any political action.
These three new kinds of thought on security – multidimensional, human
and SSR – entail other contradictions. For example, suggesting that the
new threats, concerns, and other challenges of hemispheric security are
transnational in nature and require hemispheric cooperation overlooks
the fact that the greatest shortfall in security is domestic in nature. What
fails centrally is state capacities to provide justice, control illegal migration,
review customs, train police forces, and plan social integration and cohesion
policies. In short, as Secretary-General of the OAS José M. Insulza notes, ‘Most
countries completely lack security plans or policies’ (Insulza, 2008a, p. 3).
The inadvertent consequence of these tendencies is that they authorize
the armed forces to act in spheres that historically have not corresponded
to national defence. Some authors argue that the excessive expansion of the
concept of security to areas that do not traditionally belong to it runs the risk
of making the term meaningless, which results in the potential failure of the
state to protect its citizens (Buzan, Weaver and de Wilde, 1998, pp. 21–47).
Implementing the multidimensional concept is therefore perceived as a
bridge towards the securitization of socio-economic problems and the sub-
sequent militarization of solutions. Chillier and Freeman point out four
factors that contribute to this risk: first, the historical tendency towards
political intervention during authoritarian regimes; second, the US ‘war’
on drugs, which encourages a broader role for the armed forces in ensuring
compliance with the law; third, the crisis of the public security systems
of most of the countries in the region; fourth, ‘the war against terrorism’,
launched by the US, which encourages an expansive, nebulous definition of
terrorism (Chillier and Freeman 2005, p. 1).
Consequently, the modernization of the concept of security places greater
demands on the OAS, since each conceptual advance also implies a new risk
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about which the organization is expected to give a reply. Reviewing the term
therefore provides neither clarity nor solutions. On the contrary, it creates
a broader, more complex agenda that adds regional tensions and hampers
hemispheric cooperation.
Despite having more institutional resources, all the countries on the con-
tinent are suffering the effects of the increase in violence and organized
crime. Virtually all governments and most studies on the topic agree that
poverty does not create the conditions that lead to the emergence of criminal
gangs.7 It is generally held that the increase in organized crime – as stated
by OAS Secretary-General José Miguel Insulza, too – is due to the increase
in drug consumption, the easy acquisition of firearms, modern communi-
cation and banking systems, the presence of porous borders, the weakness
of institutions linked to the criminal justice system, police corruption, and
a judicial branch which, according to opinion surveys, is regarded as inef-
ficient, slow, and unfair in virtually all the countries in the region (Insulza,
2008). Inequity and social exclusion, among other factors, contribute to
disenchantment, illegality and tolerance towards criminal forms of occupy-
ing a place in society.
Inequality in Latin America is extreme. The average Gini8 coefficient in
Latin America is 0.52, reflecting greater inequality than in Sub-Saharan
Africa (0.46); and obviously higher than the 0.41 of the US, the 0.40 of East
Asia, or the index between 0.25 and 0.35 of European countries. Brazil has
a coefficient of 0.60, reflecting the extreme inequality and discrimination
that offsets the progress of its economy (Barshefsky and Hill, 2008, p. 5). The
richest decile earns 48 per cent of the country’s income while the poorest
decile earns 1.6 per cent (Lustig, 2007, p. 231). This divergence means that
the obvious changes in the macroeconomic profile of Latin America and the
Caribbean go hand in hand with an increase in crime.
Exclusion and social fragmentation, together with the lack of expecta-
tions of improving the quality of life, encourage people to band together in
criminal gangs. This occurs particularly within the young population. Laura
Tedesco remarks that ‘One of the social costs of violence is that paradoxically,
although it creates social capital, it does so perversely. Maras or violent gangs
help young people join groups or communities that have their own codes
and create an identity that neither families nor schools have managed to
give them’ (Tedesco, 2009, p. 8).
In short, the diagnoses have achieved a fairly broad level of coincidences.
However, not even these accurate diagnoses have managed to provide effec-
tive answers to reduce the threat to citizens. Common responses include
proposals that seek the professionalization of the police force, different
forms of policing that tend to provide community responses, the re-education
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138 A More Secure Hemisphere?
of those affected, and the control of the sale of arms, drugs, and alcohol, etc.
(Buvinic, 2008, pp. 40–50). I would therefore like to draw attention to three
topics that could shed light on some of the sources of this inefficiency. First,
the logic of repression; second, the leaders’ lack of political will, and third, the
false antinomy of favouring order over security.
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140 A More Secure Hemisphere?
to believe that a 12-year-old boy who consumes paco is the main threat to
regional security (Legrand, 2009)?10
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Rut Diamint 141
Given this situation, the dominant classes opt for laws with a greater
punitive content as the only alternative to social demands. This enables
them to avoid meeting the innumerable demands produced by democracy
and the requirement for inclusion and social cohesion that this political
system creates. Governments’ responses increase discrimination, exclusion,
and authoritarianism. That is why although the OAS convened a conference
of Security Ministers for the first time, this meeting may have very few tangible
effects. The General Secretariat offered a plan based on six lines of work and
three action mechanisms: orientations and assessment for the development
of legislative proposals, public policies, and institutional reforms; construction
of periodic, reliable, and comparable indicators; strengthened rehabilita-
tion and reinsertion; improved police training; involvement of the private
sector in violence prevention, rehabilitation and social reinsertion actions;
collaboration with the mass media. This plan will be achieved by promoting
permanent consultations with governments, coordinating with other inter-
national institutions, and involving civil society and academia (Insulza,
2008, pp. 2, 10–11).11 But the OAS cannot respond unless there is demand
from the member states.
At this stage, one should stop being disingenuous and at least ask
whether this violent tension favours populist leaders who use social
inequality as a campaign slogan, or leaders who use the threat of the
lack of law and order as a source of credibility and legitimacy. Are govern-
ments really willing to combat organized crime? Or, as happened with the
democratization of the armed forces, does avoiding a thorough reform
end up being functional in that it permits the survival of regimes based
on privileges? What additional benefits can be obtained from using
criminal networks as the main source of Latin American and Caribbean
problems?
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142 A More Secure Hemisphere?
The other logic states that unless the population perceives concrete benefits
and everyday improvements, no military response will be able to prevent
violence. This was the experience of the forces operating in Haiti, an argument
repeatedly wielded by the Brazilian commander in charge of the UN military
forces when asked to increase the repression of dissident groups. He said that
there can be no social peace without social cohesion (Ribeiro Pereira, 2007;
Carmona, 2005). This statement does not imply that the forces will not meet
their task of imposing law but rather that force is not the only component
of cooperation or stabilization.
Obviously, measures such as those offered by the OAS General Secretariat
or those proposed by the United Nations Convention against Transnational
Organized Crime (to boost international, coordinated responses; agree on
standards for domestic legislation; combat money laundering; protect wit-
nesses that declare against organized crime, and prevent and combat people
trafficking) are initiatives that can improve the control of international
criminal trafficking. There are also a series of public and private initiatives
that attempt to understand the complexity of the problem and seek more
efficient solutions (WOLA, 2006, pp. 2–3).
International institutions serve to establish these patterns. The problem
is that the application of these guidelines is left in the hands of incomplete
states. Therein lies the main problem of the lack of law and order. In
the Latin American region, there are stateless territories within states. The
authorities do not cover the entire territory, the state does not exist for
many inhabitants, and many abandoned populations are exposed to other
non-state forms of domination. As a top US government official reported,
in Colombia there are 1098 municipalities with no state presence and over
7000 villages with fewer than 1000 inhabitants who do not have a per-
manent presence of police or armed forces.12 In Colombia, there are places
where the state authority has been absent for decades (Villalobos, 2006, p. 1).
Guillermo O’Donnell describes this:
The main issue and problem of the state in Latin America in the past, and
even in a present in which democratic regimes predominate, is that, with
few exceptions, the state fails to penetrate or control its entire territory. It
has implemented a frequently limited form of legality and the legitimacy
of the coercion that supports it is challenged by its scant credibility as an
interpreter and producer of the common good.
(O’Donnell, 2003, p. 149)
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144 A More Secure Hemisphere?
The two majority parties in Honduras, the PL and the PN13 have been
affected by a tendency towards internal division and increasing power
struggles; the co-opting of factual groups with enormous economic power
and the deterioration of their relations with civil society organizations,
which has been compounded by the weakness of the Electoral Court. All
this encourages conflictive conditions within the political parties due to
power struggles.
(Medrano, 2009, p. 22)
But it was only when the conflict had broken out that the OAS reacted with
all the force its instruments allowed: its member states condemned the coup
and called for the return of President Zelaya. In response to the de facto
government’s refusal to reinstate Zelaya, OAS members unanimously voted
to suspend Honduras’s membership and the OAS accompanied the negotia-
tion proposed by Costa Rican President Óscar Arias. Nevertheless, all this
legal apparatus appears to be insufficient in nations that are states without
the rule of law.
The structure from which the new role of the OAS should emerge in conflict
prevention is based on three pillars: peace building – the peaceful solution of
inter-state conflicts and the concept of multi-dimensional security linked to
a new agenda of hemispheric security; the protection of human rights; and
the defence and promotion of democracy together with the reinforcement
of representative institutions (Serbin, 2009, p. 20). This is now a greater
challenge than during the Cold War.
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Rut Diamint 145
Previously, the enemy was the state, with moderately predictable policies,
which ultimately acted on the basis of international norms, either to
implement or to prevent them, but the normative-institutional framework
existed. Nowadays, the enemies of democracy are also non-state actors who
ignore the rules of the international system. They are linked to the illegal-
ity and the informality of the extra-legal economy entailed by these new
wars (Kaldor, 2001, p. 119–38) and attempt to corrupt government and
co-opt individuals on the basis of a project involving financial power rather
than installing a new political regime. The old agenda of territorial issues,
regional security, and national defence continues, with the addition of new
forms of violence and non-traditional threats.
Within the sphere of the United Nations, progress has been made in R2P
policies to defend the most vulnerable sectors of the population: children,
women, refugees. The UN is committed to a humanitarian agenda that
will reinforce institutions and society (Miller and Rudnik, 2008: 7–10;
see UN, 2005, Para. 9). This approach poses challenges to the OAS. The
future of its effectiveness will be linked to the response member states
provide for social problems involving law and order. If the agenda
remains confined to the principles of sovereignty and non-interference,
the new humanitarian agenda will not be able to be undertaken by the
regional organization. This would therefore alter both the concepts of
multidimensional security and of human security. The OAS’s capacity to
respond to the new threats will be seriously affected and its credibility will
be reduced in the eyes of the community. If, on the contrary, progress is
made on the humanitarian agenda, the OAS must determine the instru-
ments it will use to achieve these objectives without resorting exclusively
to the armed forces. Since the organization only has resources to act after
a conflict has emerged, and has no early warning mechanisms (Milet,
2004, pp. 143–76), one option would be to create a conflict prevention
centre. But centrally, if states don’t yield effective sanction capacity, the
organization will be unlikely to make a difference in combating the multi-
dimensional lack of law and order.
The OAS may only act with the consensus of its members and according to
their instructions. This consensus has never been easy to achieve and is more
difficult now that the hemisphere is profoundly divided politically and ideo-
logically (Hakim, 2009). Multilateral projects must emerge from the domestic
policy of every state. Defence and security must therefore be regarded as state
policies rather than government policies, while both the armed forces and
the police must internalize the notion that they are civil servants. Above all,
nations must complete their institutional development. If certain govern-
ments set illegal rules, if these nations accept leaders who build their power
illegally by challenging republican constitutional principles, if civil society
fails to make a concerted effort to desecuritize the repressive logic, the OAS
cannot be expected to implement the new security agenda on its own.
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146 A More Secure Hemisphere?
Appendix
Security mechanisms
OAS
(Continued)
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Rut Diamint 147
OAS
Inter-American 1942
Defense Board
IADB (2005 Review)
Inter-American 1979
Court of Human
Rights (CIDH)
Notes
1. Samuel Huntington (1994, p. 1723) developed the concept of the third democratic
wave to refer to states’ movement towards democracy, begun in 1974 with the
carnation revolution in Portugal and continuing in Southern and Eastern Europe,
Latin America, Africa and Asia. In 1979, Alvin Toffler (1980) had used the concept
to predict the new global phase of capitalism.
2. In 1983, the Contadora Group – Mexico, Panama, Colombia, and Venezuela – met
to promote pacification in Central America. In 1985, Brazil, Argentina, Peru, and
Uruguay formed a Support Group for the Contadora initiatives, known as the
Group of Eight. In 1986, they formed a group to continue supporting efforts to
solve the Central American crisis and provide collective answers to Latin American
issues. Chile, Ecuador, Bolivia, and Paraguay joined in 1990 as well as representa-
tives from Central America and the Caribbean.
3. The Santiago Declaration forces member countries to engage in collective action
if the democratic institutions of a country are threatened. Resolution 1080 states
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148 A More Secure Hemisphere?
that the OAS Permanent Council will immediately be convened if a country suspends
its democratic process, and that a special session of the General Assembly will be
held within a maximum of 10 days. The UPD is an agency that reports on and
follows up democratic mechanisms.
4. This belief was destroyed by the coup d’état in Honduras on 28 June 2009.
5. See also Hill (2004), Stavridis (2007), and USSOUTHCOM (2008).
6. In order to promote this agenda, the United Nations created the Commission on
Human Security in January 2001.
7. See among others: ‘Promoción de la Cooperación Hemisférica para el Tratamiento
de Pandillas Delictivas’, presented by the Salvadoran delegation with the joint
sponsorship of the delegations of Honduras, Nicaragua, the US, Bolivia, and
Guatemala, and approved during the 12 May 2008 session, OEA/Ser.G, CP/CSH-
990/08 rev. 4 May 2008, p. 2; ‘Organised Crime and Terrorism,’ Standing Group
Organised Crime, European Consortium for Political Research, 12 May 2006,
http://www.essex.ac.uk/ECPR; Alex Stevens and Dave Bewley-Taylor; The Beckley
Foundation Drug Policy Programme (BFDPP), January 2009; Paoli (2008); Luis
Esteban Manrique (2006).
8. This is a measure of inequality devised by Italian statistician Corrado Gini,
where 0 corresponds to perfect equality (everyone has the same income) and 1
corresponds to perfect inequality (one person has all the income and all the rest
have none).
9. In April 2009, auguring an opposite trend to this repressive model, US Secretary
of State Hillary Clinton admitted the joint responsibility of her country, particu-
larly as regards drug consumption and the provision of light arms.
10. The paco is a mix of cocaine, crushed glass, kerosene, chemical product and even
rat poison.
11. The issue was also on the agenda at the Summit of the Americas 2009 in Trinidad-
Tobago (Final Declaration, 2009, Para. 68).
12. Mail interview, 30 January 2008.
13. Honduran Liberal Party (PL) and Honduran National Party (PN).
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8
Poverty Reduction and the Role of
Regional Institutions
Nicola Phillips
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154 Poverty Reduction and the Role of Regional Institutions
This chapter sets out to justify this critical appraisal of the record on poverty
reduction in the region, and considers why the poverty reduction strategies
of the IDB and other regional institutions have met with scant success.
It suggests that the explanations that are usually given, which focus on the
political and institutional problems which have impeded effective imple-
mentation at the national level, offer only a partial and rather distorted
understanding of the poverty reduction agenda and its results. Rather, this
chapter argues that the poor record of the poverty reduction agenda owes
much to the problematic conceptual basis on which the institutions have
articulated their strategies. On the one hand, the emphasis on national-level
politics obscures the ‘vertical’ dimensions of poverty dynamics (Ponte, 2008)
associated with the terms of incorporation of Latin American economies,
producers, and workers in global production networks (GPNs) and associated
labour markets. The argument here pivots on the notion of ‘adverse incor-
poration’, which stands as a challenge to the IDB’s and other institutions’
emphasis on ‘exclusion’ (from globalization) as the cause of persistent pov-
erty, and by extension greater ‘inclusion’ as the strategic priority for poverty
reduction. On the other hand, the focus in both the regional poverty reduc-
tion agenda and more widely the MDGs prioritizes poverty in its ‘absolute’
incarnations, neglecting its complex structural connections with ‘relative’
poverty – that is, with socio-economic and other forms of inequality. It is
thus suggested that alongside any due consideration of national-level politics
and institutions, recognition of the importance of these ‘vertical’ and struc-
tural influences is central to an adequate understanding of poverty dynamics
in the region; indeed, their omission from policy frameworks developed by
the IDB and other institutions constitutes an important explanation for the
shortcomings of the poverty reduction agenda.
The discussion proceeds in three sections. The first offers an empirical
summary of the nature and trajectory of poverty in the region as a backdrop
to the discussion. The second considers the approach and strategies of the
regional institutions (principally the IDB) in relation to poverty reduction.
The third seeks to advance an explanation for the shortcomings of the record
on poverty reduction, emphasizing the links with the functioning of global
value chains and global labour markets, and the associated connections with
the dynamics of inequality.
The problems and pitfalls of measuring poverty have been amply docu-
mented. Differing methods of measurement yield sharply different esti-
mates of overall global, regional, and national levels of poverty and
contradictory interpretations of observed trends. The most common mea-
surement of ‘absolute’ poverty – that is, the absence of the basic necessities
for human survival – relies on a calculation of ‘purchasing power parity’
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Nicola Phillips 155
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156 Poverty Reduction and the Role of Regional Institutions
time (ECLAC, 2008, pp. 10–11). By 2007 the region, taken as a whole, looked
highly likely to yield figures for poverty reduction which met the first target
of the MDGs.
Yet these aggregate figures are ultimately misleading. The data are heavily
skewed by trends in the large economies, specifically in Mexico and Brazil.
Those two countries, along with Chile and Ecuador (the latter using data
for urban poverty), had already met the first MDG in 2007, with Costa Rica
close behind.2 ECLAC then reported progress towards the MDG targets that
had been faster than expected in a handful of other countries: Venezuela,
Colombia, El Salvador, Nicaragua, and Peru. Yet, by 2008, the remaining
countries of the region were showing few signs of approaching the targets.
It is thus clear, as ECLAC conceded, that the ‘subsidy’ represented by Brazil,
Mexico, and Chile – which together account for around 60 per cent of the
region’s population and have all already exceeded the target of the MDGs –
distorts the regional picture substantially. Assessments of the levels of growth
that would be required for the region as a whole to meet the first MDG are
consequently very low (ECLAC, 2008: 15).
Equally, the achievement of the goal by ‘the region’ would not indicate
significant poverty reduction in all the countries encompassed within it, nor
necessarily for a significant proportion of the region’s poor. Indeed, it may
mask a persistence or worsening of poverty levels for large parts of the poor
population. For the Dominican Republic, for instance, ECLAC recorded
poverty levels of 47.1 per cent for 2002, 44.5 per cent for 2006, and 44.5 per cent
for 2007. Indigence levels for the same years were recorded as 20.7 per cent,
22 per cent, and 21 per cent. For Paraguay, the stasis is comparable: poverty
levels were recorded as 61 per cent in 2001 and 60.5 per cent in 2005 and
2007; indigence levels for the same years were 33.2 per cent, 32.1 per cent,
and 31.6 per cent. Especially given the small size of these two countries’
populations, these figures indicate at best negligible progress in terms of the
numbers of people lifted out of poverty and indigence since the start of the
decade. Likewise, for Uruguay, data on indigence in urban areas registered
a rise between 2002 and 2005, but then a slight fall by 2007; nevertheless
poverty levels exhibited an increase of some three percentage points over
this period.
This aggregate data also conceals substantial variations in patterns and
levels of poverty between particular groups in society. Women are in the
majority among the populations vulnerable to poverty and indigence, also
disproportionately carrying the burden of dealing with poverty, as recog-
nized in the now influential ‘feminization of poverty’ discourse (Chant,
2008). Likewise, poverty among indigenous groups is substantially higher
across Latin American societies. The general point is that poverty is strongly
associated with patterns of disadvantage, discrimination, and inequality
operating along diverse axes, including gender, age, ethno-racial identity, and
migration status.
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Nicola Phillips 157
Since the mid-1990s, there has been a significant refocusing of both national
and international strategies under the ‘poverty reduction’ banner. At the
national level, a restructuring of welfare regimes and the emergence of
new forms of social assistance have been implanted across the region, the
Brazilian Bolsa Escola/Familia, the Mexican Progresa/oportunidades and the
Chilean Chile Solidario programmes being among the most visible examples
(Barrientos, 2009). These national-level initiatives have been accompanied
and supported by a central concern with poverty reduction strategies in
regional institutions and within the inter-American agenda. The IDB’s first
major statement on the subject appeared in 1997, and, after a flurry of reports
and papers on the subject in between, an updated document was issued in
2003 which outlined a strategy ‘to promote poverty reduction and social
equity as well as environmentally sustainable growth’ (IDB, 1997; 2003b).
The 1997 document set out clearly the IDB’s conceptual understanding
of poverty. The aim was stated baldly on the first page of the document,
‘to help the poor earn their way out of poverty’ (IDB, 1997, p. 1), to which
end the strategy was formulated as one of helping to enhance the inclusion
of the poor in labour markets, increase their productivity, and cajole the
private sector into cooperating with this agenda by providing better quality
employment opportunities. The 2003 document preserved this market-based
understanding of the causes of and remedies for poverty, but claimed to have
updated this into a more ‘multidimensional’ approach which incorporated
issues of income, participation, vulnerability, and quality of life. An integrated
strategy would therefore involve mobilizing this multidimensional concep-
tion of poverty and emphasizing the issues of equity (and its consequences
for poverty), social protection, social exclusion, the institutional capacity of
states in respect of policy formulation and implementation, and the centrality
of poverty reduction in all areas of the Bank’s activities (IDB, 2003b, p. 14).
The resulting strategy since that time has emphasized lending strategies to
support poverty reduction strategies at the national level. First, the IDB has
collaborated with the World Bank, International Monetary Fund (IMF), and
other multilateral and bilateral agencies in the Poverty Reduction Strategies
(PRS) process, under which poverty reduction assistance and debt relief to
poor countries were tied to their governments’ preparation and implemen-
tation of a poverty reduction strategy paper (PRSP). The PRS approach was
adopted in 1999 as a comprehensive, ‘locally-owned’ approach to poverty
reduction, encapsulating the market-oriented approach to poverty reduction
built around three key components: ‘promoting opportunity’ and pursuing
‘pro-poor growth’; ‘facilitating empowerment’, particularly by promoting
‘good governance’; and ‘enhancing [human] security’, involving such areas
as health, education, and sometimes ‘social safety nets’ or ‘social protection
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158 Poverty Reduction and the Role of Regional Institutions
measures’ (Craig and Porter, 2003, pp. 53–4). The four countries identified in
the ‘highly indebted poor countries’ (HIPC) initiative were obliged to parti-
cipate (Bolivia, Guyana, Honduras, and Nicaragua), and a range of other
countries (Belize, the Dominican Republic, Guatemala, Paraguay, and Peru)
were also involved in the PRS process over the 2000s.
The second emphasis has fallen on supporting social policy schemes aimed
particularly at social assistance programmes such as those outlined above,
which were promoted as ‘a key element in the fight against the intergenera-
tional transmission of poverty and inequality and … good complements to
efforts to increase the quality and coverage of health and education services
through supply-side interventions’ (IDB, 2003a, p. 19). Education and health
sectors constituted the priority areas for IDB investment strategies. A third
strategic focus on ‘improving tax revenues for equity’ and associated institu-
tional reforms has aimed to create macroeconomic conditions favourable to
sustaining these poverty reduction strategies based on social assistance and
conditional cash transfer schemes.
Yet the primary emphasis in this market-based understanding of develop-
ment has continued to fall heavily on employment – that is, the opportunity
for the poor to exploit their key endowment of labour – as the primary means
to realizing human development potential and reducing poverty. In this
respect, the contemporary poverty reduction agenda deviates very little from
the much earlier basic needs and human development agendas, which took
shape from the 1970s onwards (Payne and Phillips, 2009). The IDB empha-
sizes the importance of ‘close collaboration with the private sector’ in order
to further the goals of inclusion of the previously ‘excluded’ in the labour
market (IDB, 2003a, p. 21). One of the most visible new initiatives to this
end, promoted by the IDB and a range of other multilateral and donor orga-
nizations from the 1990s onwards, involved the expansion of ‘microcredit’
schemes – an ‘entrepreneurial’ model of development which aimed to provide
the poorest in society, particularly women, with the possibilities of setting up
and sustaining small businesses (see Ferguson, 2007).
The goals relating to education and health policy are also clearly tied into
this casting of the poor as actual or potential workers, increasing their skill
levels and capacity to function effectively in the labour market. Notably, this
point has been highlighted as a critique from within the IDB itself. An evalu-
ation report of 2003 drew particular attention to the instrumental nature of
the market-based strategy in taking other goals of social development, such
as health and education, as a ‘means to an end’: such interventions would
improve the productivity of poor workers and consequently their income-
earning capacities as a means to contribute to the overall goal of economic
growth (IDB, 2003c, p. 7).
The conceptual foundations of the regional poverty reduction agenda
are clear. First, the dynamics of poverty and the substance of the poverty
reduction agenda are articulated in strongly national terms, built as they are
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Nicola Phillips 159
around the PRS approach and the national-level reform of welfare systems
and social policy. Likewise, the bulk of assessments of the record of the
poverty reduction agenda locate explanations in national-level politics and
institutions, in either a positive or a negative sense: the positive evaluations
would be enthusiastic about the social policy innovations of various leftist
governments, such as those of President Luiz Inácio Lula da Silva in Brazil
or Hugo Chávez in Venezuela; the negative ones would focus on the myriad
political and institutional impediments to effective implementation, policy
consistency, and/or constructive relations with regional and international
donors. The market-based understanding of poverty necessarily takes some
account of ‘globalization’, but again this is usually cast in nationalized terms.
The goal of ‘promoting inclusive globalization and regional integration’ (IDB,
2003b, pp. 22–3) is to be furthered through macroeconomic coordination
and ‘appropriate’ forms of exchange rate, investment and trade policy; that
is, through national-level interventions to deal with the implications for the
poor of the functioning of markets. Again, the failures of implementation in
these policy areas are often offered as an explanation for the uninspiring out-
comes of poverty reduction strategies. To this extent, the poverty reduction
agenda has been consistent with the overall thrust of the neoliberal develop-
ment framework within which it is encased; that is, it has constituted a
programme of internal reform which has excluded any serious consideration
of the ways in which the workings of the global economy condition both the
causes and the dynamics of poverty.
Second, the ‘causes’ of poverty are strongly related to notions of ‘exclusion’ –
as both a general issue of social exclusion or marginalization and as a more spe-
cific, although intrinsically related, issue of exclusion from the labour market.
The poverty reduction agenda is thus articulated as one of achieving greater
levels of ‘inclusion’, in order, as the World Bank (1990) put it, to enhance the
‘productive use of the labour of the poor’. Such a conceptual frame conforms
with the orthodox view, which has achieved prominence in the interna-
tional development community, that the poor are those who have failed
to engage with globalization and that a ‘deepening’ of globalization will
lift nearly (and eventually) all of the world’s poor out of destitution (see
Kaplinsky, 2005, p. 49; Milanovic, 2003). A direct connection is posited
between the acceleration of globalization and liberalization and a decline
in the absolute numbers of people living in poverty and indigence across
the world. The case is therefore made for an expansion of globalization
and the elaboration of strategies that will enable the benign forces of globali-
zation to reach the world’s poor more effectively (World Bank, 2002a, 2002b;
Dollar and Kraay, 2002; Sala-i-Martin, 2002).
Third, the accent in the poverty reduction agenda is on poverty in its
‘absolute’ manifestations, largely disconnected from the problem of ‘relative’
poverty (inequality). The connections between the two are well recognized
in scholarly research and indeed in policy debates within and between
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160 Poverty Reduction and the Role of Regional Institutions
institutions, and the IDB has perhaps gone furthest of all the multilateral
institutions towards recognizing the importance of inequality in its focus on
‘equity’ and ‘social exclusion’. Nevertheless, the resulting policy frameworks tend
systematically to marginalize questions of inequality – their absence is particu-
larly striking in the MDGs – and/or to focus on economic inequalities without
sufficient attention to their complex relationship with other forms of inequal-
ity, particularly those relating to gender, ethno-racial identity, and migration
status. The assumption is that economic inequalities are amenable to redress
through a form of market-based ‘empowerment’ (that is, through the extension
of employment and entrepreneurial opportunities), and that this empower-
ment will have a ‘trickle-down’ effect, as it were, on other forms of inequality.
Let us turn now to consider the problems and implications of this con-
ceptual frame in more detail. The first and second points – the focus on the
national level and the emphasis on an exclusion/inclusion duality – form the
basis for a set of arguments concerning the ‘vertical’ dynamics of poverty,
focusing in particular on the workings of global value chains and associated
labour markets. The third – the interest in absolute poverty at the expense
of relative poverty – invites a consideration of the links between poverty and
inequality that need to be incorporated into an adequate understanding of
poverty dynamics and appropriate remedies.
The critique of the orthodox view of poverty outlined above is well established
in academic debates. Poverty in this view is cast as a ‘residual’ phenomenon –
the result of exclusion from globalization processes, and amenable to
resolution through the extension of (labour) markets and appropriate sup-
porting policy interventions. The thrust of critical arguments has been that
poverty is instead a ‘relational’ phenomenon (Bernstein, 1990; Kaplinsky,
2005), which is in important respects generated and reinforced by global-
ization processes. Not disputing partial improvements in data on poverty,
and accepting that the general direction has been towards a reduction in
the proportion of the world’s population living in poverty, the contention
is that there is no directly causal or uniformly positive association between
global socioeconomic restructuring and patterns of poverty, and indeed that
globalization has acted to perpetuate poverty and vulnerability to poverty
at least as much as it could be said to have contributed to its lessening. The
picture, in other words, is substantially more mixed than the orthodox view
allows. The task is therefore to understand how exactly the relationship
between global socio-economic change and the dynamics of poverty works,
and sophisticated studies have taken up this challenge.
These ‘residual’ and ‘relational’ notions of poverty are related to a further
set of concepts which are of particular value to the present discussion, namely,
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Nicola Phillips 161
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162 Poverty Reduction and the Role of Regional Institutions
key mechanism for lifting people out of conditions of poverty. The focus
on adverse incorporation instead contends that economic upgrading is at
least as often associated with social downgrading as a result of the dis-
advantageous terms on which poor producers and workers are incorporated
into the (labour) markets associated with particular sectors. The terms on
which incorporation takes place are consequently of decisive importance in
shaping the relationship between global economic restructuring and social
upgrading, and the task for poverty reduction agendas is to take due account
of what Stefano Ponte (2008, p. 27) calls the ‘normal functioning’ of global
value chains (GVCs). The pressures arising from competition between firms
and the pronounced squeezing of suppliers by retailers to reduce costs and
therefore maximize profit are among the characteristics of this ‘normal
functioning’ which produce the ‘symptoms’ of poverty and deprivation
(Ponte, 2008, p. 27).3
The social consequences of economic restructuring are also shaped by the
functioning of particular kinds of labour markets. In the Latin American
and Caribbean context, ECLAC (2008) has well documented that the bulk
of progress in alleviating poverty and indigence over the 2002–7 period was
due to an increase in the average household income, driven predominantly
by labour income. In most cases, including in those countries which regis-
tered the highest reductions in poverty levels, the increase in labour income
was due to a rise in the wages of the employed person(s), whereas in others,
including those where levels of change have been negligible, the key factor
was the net employment rate, even while wage levels played a part. While
unemployment rose considerably across the region during the 1990s, there is
evidence of a decline in urban unemployment in the majority of the region’s
major cities. It should nevertheless be noted that gender disparities are
significant in the data – unemployment among women remains higher than
among men, and their participation and employment rate markedly lower.
This indicates that both employment and income levels are crucial in
understanding the dynamics of poverty and the means of alleviating it. Yet
the point is that the bulk of employment growth (as opposed to economic
growth) has been in low-productivity, low-wage sectors of the informal
economy, and both the 1990s and 2000s have seen an arresting expansion
of precarious employment and low-quality jobs. This has occurred as a result
of both the workings of GPNs – particularly in sectors where demand for
low-cost labour is paramount – and, by extension, of extensive processes
of ‘labour flexibilization’ reforms that have been put in place to meet the
generalized demand for more flexible and lower cost labour. Questions
concerning the quality of employment and the terms on which workers are
incorporated into particular labour markets are therefore central to the way
we think about poverty in the region, inasmuch as the absence of decent
work conditions or access to good-quality jobs is strongly correlated with
levels of vulnerability to poverty.
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Nicola Phillips 163
The second conceptual emphasis that has dominated national and interna-
tional policy debates has been on poverty in its ‘absolute’ incarnations. The
focus has been on measuring the numbers of people living in poverty and
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164 Poverty Reduction and the Role of Regional Institutions
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166 Poverty Reduction and the Role of Regional Institutions
Conclusions
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Nicola Phillips 167
Notes
1. This system estimates what a US dollar could buy at a given point in time, translates
this into other currencies, and maps income levels across countries on this basis.
2. The availability of data only for urban areas (which in the ECLAC report applies
to Ecuador, Uruguay, and Argentina) is to be noted as, although the incidence of
poverty remains higher in rural areas (as a percentage of the total rural population),
the number of people living in poverty in urban areas has increased significantly as
a result of both accelerating urbanization and rapid population growth (Ravaillon
et al. 2007; IDB 2003a).
3. Much more detailed research is also needed to establish when, where, how and
under what circumstances a positive relationship does or can exist between economic
restructuring and social outcomes. Among the important variables are the char-
acteristics of the global value chain in question (including the extent to which it
is dominated by buyers or by producers); the manner in which it is governed by
firms, states, labour organizations, and other non-state actors; and the variegated
impact of regulatory innovations such as ‘sustainability’, codes of conduct, and
standards relating to fair/ethical trade.
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UN Economic Commission for Latin America and the Caribbean (ECLAC) (2008)
Social Panorama of Latin America: Briefing Paper (Santiago: ECLAC).
Wade, Robert (2004) ‘Is Globalization Reducing Poverty and Inequality?’ World
Development, 32:4, pp. 567–89.
World Bank (1990) World Development Report 1990: Poverty (New York: Oxford
University Press).
—— (2002a) Globalization, Growth, and Poverty: Building an Inclusive World Economy
(Washington DC: World Bank).
—— (2002b) Global Economic Prospects and the Developing Countries 2002: Making Trade
Work for the World’s Poor (Washington DC: World Bank).
Shaw
Part III
The Effectiveness of Other
Institutions
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9
The Successes, Failures and Future
of Mercosur
Marc Schelhase
Introduction
171
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172 The Successes, Failures and Future of Mercosur
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Marc Schelhase 173
this is left to the intergovernmental process and, as we will see later on, this
weakens the effectiveness of the organization and therefore accounts for
some of the challenges and difficulties that Mercosur continues to face.
As a result, and building on the significant increase in intra-bloc trade
in the first half of the 1990s, the realities of increasing economic intercon-
nectedness and therefore interdependencies resulted in a reconfiguration of
organized business interests vis à vis the regional integration process. The
business community was initially sceptical about the benefits of Mercosur,
primarily based on the lack of competitiveness of the domestic industries
after decades of ISI.5 However, with increasing levels of intra-bloc trade and
cross-border investments, business interests shifted. The increasing region-
alization and globalization of the Southern Cone markets also resulted in a
reconfiguration of business-interest representation on the domestic level and
the emergence of new regional forms of interest representation.6 Also, the
significant inflows of FDI brought the growing presence of Trans-National
Corporations (TNCs). The combination of cross-border investments, TNCs
investment, widespread privatization (first in Argentina, then in Brazil) and
structural reforms on the domestic level fundamentally changed the economic
landscape of the Southern Cone (Schelhase, 2008, pp. 97–8) and gave rise to
what Phillips (2004) has called the Southern Cone model of regional capitalist
development.
Consequently, Mercosur in the mid-1990s could be considered a success.
This is particularly the case in comparison to other regional integration
schemes at the time (Bouzas, 2001, p. 3) and in the context of enabling
economic reforms, sustaining economic growth, and the substantial increases
in FDI in the region (Schirm, 2002, pp. 117–18; 124–8). As Bouzas notes, ‘in
just four years Mercosur made more progress towards intra-regional trade than
in the previous three decades. In effect, by January 1995 the bulk of intra-
regional trade was subject to zero tariff rates’ (Bouzas, 2001, p. 3). The growing
economic interdependence between Argentina and Brazil was so significant
that the same author has called the period 1995–8 the ‘age of the markets’,
where ‘the prevailing view was that Mercosur was so successful that it could
move forward pushed solely by private sector interests’ (Bouzas, 2001, p. 4).
Yet, both externally and internally, the agenda of Mercosur became increas-
ingly congested. With the formal launch of talks in 1994 to establish a Free
Trade Area of the Americas (FTAA) and the start of negotiations in 1999 to
conclude a FTA between Mercosur and the EU, the organization was faced
with developing agreed common negotiating positions, which are explored
further below. This external congestion happened at a time when Mercosur’s
internal progress was already lagging behind, something Bouzas has called
‘a widening “relative enforcement gap”’ (2001, p. 4), and its aims to deepen
integration by 2000 (Agenda 2000) were stagnating (Bouzas, 2001, p. 4).
At the same time, the global economic conditions exacerbated the grow-
ing internal tensions. The region had to cope with the fall-out from the
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174 The Successes, Failures and Future of Mercosur
Mexican Peso crisis of 1994, which saw the end of the fixed-exchange rate
regime and a devaluation of the Mexican currency. In addition, the 1997
Asian crisis and the crisis in Russia in 1998 weakened the confidence of
investing in, and lending to, emerging economies (Schelhase, 2008, p. 92).
The turmoil in the international economic environment had a direct impact
on Mercosur countries, and here in particular Argentina and Brazil. An
important factor was also the substantial devaluation of the Brazilian Real in
1999, as a result of the end of its peg against the US Dollar. With a depreciat-
ing Real, Brazilian exports to Argentina became more competitive, and with
diverging currency regimes the Argentine Peso, still pegged to the US Dollar,
appreciated and made Argentine exports increasingly expensive with a direct
impact on its trade balance with the rest of Mercosur and Brazil in particular
(IDB, 2004, p. 24).
However, it is important to point out that devaluation of the Real
was just one factor contributing to the deteriorating economic climate
(Bouzas, 2001, p. 5). Indeed, persistently high unemployment levels in
Argentina (14.2% in 1999) and negative GDP growth rates (–3.39% in 1999
and ⫺ 0.79% in 2000) combined with a fiscal and monetary policy con-
strained by a currency peg, demonstrated the increasingly difficult situation
the country was in (IDB, 2004, p. 20). In contrast, Brazil’s unemployment
rate was 7.6 per cent in 1999 with a GDP growth rate of 0.79 per cent in
1999 and 4.36 per cent in 2000. At the same time, intra-Mercosur trade col-
lapsed from 25 per cent of total trade in 1998 to 11.5 per cent in 2002 with
the volume of trade in US$ billions shrinking by 50 per cent during the
same period (IDB, 2009, p. 29). Furthermore, overall levels of FDI dropped
by approximately 70 per cent between 1999 and 2003, with FDI inflows
into Argentina being particularly badly hit in the years 2001–3 due to the
country’s financial crisis (IDB, 2009, pp. 59–60).
This increasingly difficult economic climate provides the context and
explanation for the growing tensions within Mercosur. Whereas the initial
phase of the regional integration project was characterized by the economic
and political convergence of the countries’ aims vis à vis regional integra-
tion, the second half of the 1990s was now characterized by an increasing
divergence of these aims as a direct result of domestic economic problems.
As a consequence, the CET came increasingly under pressure, both in terms
of lowering it to make extra-bloc trade (meaning cheaper imports in the case
of Argentina) and in the form of tariff increases as anti-dumping measures
(in the case of Paraguay and Uruguay) (Phillips, 2004, pp. 94–5). As Phillips
(2004, p. 94) puts it, ‘unilateral changes to the rules governing the bloc prolif-
erated further and government responses were progressively atomised rather
than collective’. At one point, Argentina’s Minister of the Economy Domingo
Cavallo even suggested suspending the Mercosur project of a customs union
and eventual common market and focusing on an FTA instead (Schelhase,
2008, p. 92). These tensions finally culminated in the economic crisis in
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Marc Schelhase 175
Argentina in 2001/2, in the wake of which the US Dollar peg for the Peso was
abandoned and the Peso devalued.
The crisis in Argentina marks the end point of the first decade of the
evolution of Mercosur and in many ways reflects the internal problems and
challenges of regional integration in the Southern Cone. However, it also
provides the link to the next section of this chapter, which starts by looking
at the re-launch of Mercosur in the aftermath of the crisis.
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176 The Successes, Failures and Future of Mercosur
Néstor Kirchner. The desire was to return to the previously high levels of
intra-bloc trade and cross-border investments by accelerating regional political
and economic integration and in the process creating and strengthening
globally competitive industries (O’Keefe, 2003, p. 3). The emphasis was
placed on macro-economic policy coordination now that all Mercosur
members had similar currency regimes (O’Keefe, 2003, p. 3), on the more
robust implementation of Mercosur-related legislation, and also on regional
infrastructure projects to physically integrate the region better and facilitate
trade (Schelhase, 2008, p. 96).
Yet, despite this short revival and re-launch of the integrationist agenda,
to date key problems have remained unresolved, partly because different
domestic economic agendas resurfaced (as we will see later in this chapter),
but also because of the clear lack of long-term political commitment to
make the institutional structure of Mercosur work more effectively and thus
deepen the integration process. Essentially, the organization continues to
suffer from (very) weak institutional structures. These are intergovernmental
rather than supranational in character, as mentioned above. The promised
strengthening of the capacity of the Mercosur Secretariat to include the
monitoring of technical norms and the implementation of Mercosur decisions
(Schelhase, 2008, p. 10) has been weakened by the decision of member states
to maintain a veto about what work the Secretariat will be allowed to conduct
in this area (Bouzas, 2008, p. 360). The primary motivation here is to main-
tain national vetoes but also to prevent a more centralized decision-making
capacity, which would potentially weaken national autonomy (Kaltenthaler
and Mora, 2002, pp. 72–97) through the creation of a ‘common vision’, as
Bouzas (2008, p. 360) calls it.
The desire to maintain national control over the integration process is also
underlined by the poor implementation of Mercosur decisions and norms
into national law. This is due to the provision in Article 40 of the Protocolo
de Ouro Preto that stipulates how decisions made by Mercosur institutions
have to be incorporated into the domestic law of each member state before
they can enter into force. This three-step process asks member states first to
take the necessary measures to incorporate the decisions into domestic law,
second to inform the Mercosur Secretariat that they have been incorpo-
rated, and third – once the decisions have been incorporated in all member
states – the Secretariat then informs all member states accordingly, after
which it takes 30 days for the decisions to actually take effect.
Thus, attempts by the Common Market Group and the Common Market
Council to improve the implementation process and to widen the scope of
Mercosur to include, for example, intra-regional investment protection, are
curtailed, as the resolutions and decisions of both bodies cannot supersede
the provisions contained in Article 40, unless the Protocolo de Ouro Preto is
revised to remove the national ‘second-level’ veto contained therein (Bouzas,
2008, pp. 361–3). Furthermore, the widening of the Mercosur process has
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Marc Schelhase 177
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178 The Successes, Failures and Future of Mercosur
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Marc Schelhase 179
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180 The Successes, Failures and Future of Mercosur
the particular characteristics of its economy), and for Uruguay 26 per cent
(IDB, 2009, pp. 38–51). Although significant in themselves, in the context
of a regional integration project that aims to become a full customs union
and eventually a common market, these figures are low (except in the case
of Paraguay). They reflect the importance of extra-regional trading partners
to Mercosur member states and, as they are still substantially below the
levels achieved by the end of the 1990s, an increasing diversification rather
than a consolidation of trading partners and the inability of members to
deal effectively with the bloc’s asymmetries.10
Levels of FDI have also recovered, but in 2007 Mercosur’s share of 8.3 per
cent of all FDI received by developing countries was still below the average
of 9.4 per cent for the period 2001–5 and the 17.7 per cent share recorded
during the height of privatizations in Argentina and Brazil in the 1990s
(IDB, 2009, pp. 59–60). Although FDI inflows into Argentina have gradually
recovered, Brazil accounts for approximately 75 per cent of all FDI inflows
into Mercosur between 2000 and 2008 (IDB, 2009, pp. 60–1). Conversely,
Brazil is now the biggest investor in Argentina, partly as a result of the
Mercosur integration, but also as a result of a fall in Argentine asset prices in
the wake of the 2001/2 crisis (IDB, 2009, p. 62).
Indeed, these tensions vis à vis the internal market mirror the problems
encountered with the CET and explain its only partial implementation,
resulting in an increasingly ‘perforated’ tariff. As Mesquita Moreira (2008, p. 14)
argues, ‘the main problem with the Mercosur … is … one … of policy design …
[The CET] closely reflects Brazil’s industrial interests’. As the CET on capital
goods of 16 per cent is relatively high, the result of fully implementing it
would be to ‘[shift] demand from producers outside the bloc to producers in
Brazil … and … [thus] asking consumers in Uruguay and Paraguay to help
pay the extra cost without getting any of the benefits’ (Mesquita Moreira,
2008, p. 14). Yet, without a fully functioning CET, the benefits of a common
market in terms of economic growth and inward investment cannot be fully
realized (Mesquita Moreira, 2008, pp. 14–15), thus undermining Mercosur’s
overall potential.
Following on from this focus on the internal economic dynamics of
Mercosur, the next section of the chapter will map some of the external
challenges facing the organization.
Similar to the institutional and internal economic challenges, Mercosur’s
external agenda is, as previously noted, equally complex and congested.
Throughout the 1990s and into the new millennium the twin dynamics that
dominated Mercosur’s external trade agenda, and which to some extent pushed
the member states to attempt to develop common negotiating positions, were
that of the FTAA and Mercosur–EU FTA negotiations (Schelhase, 2005).
With the FTAA process at the time of writing still stalled, what has
emerged from the failed FTAA is the increasingly important role of Brazil
as a regional leader, and Mercosur is seen by Brazil as a useful vehicle to
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Marc Schelhase 181
Furthermore, especially for Uruguay but also Paraguay, the increasing amount
of bilateral agreements between Argentina and Brazil are undermining the
core functions of Mercosur, thus diminishing its benefits by encouraging
fragmentation (IDB, 2009, p. 67). As a result, Uruguay has repeatedly sought
to be allowed to negotiate bilateral trade agreements outside the Mercosur
framework, something that is not possible under the bloc’s founding treaties,
in order to overcome the perceived lack of progress and diminishing returns
in the context of Mercosur. However, these attempts have been repeatedly
blocked (MercoPress, 2009g).
The Mercosur–EU FTA, which is at the time of writing (summer 2009) still
being negotiated, and which was initiated and at times largely sustained by
the business communities of the EU and Mercosur, has also suffered repeated
attempts at re-launch amid tensions over agricultural subsidies in relation to
the EU and industrial goods and services in relation to Mercosur.11 These are
areas that have also halted the negotiations to conclude the World Trade
Organization’s (WTO) Doha round of trade negotiations. The Mercosur–EU
FTA was put on the back burner following the collapse of the FTAA and the
aim to solve the outstanding disputes in the context of the WTO negotia-
tions. However, with these now stalled, the EU and Mercosur will try to start
the negotiations again in late 2009 in order to reach an agreement in 2010
(Radowitz, 2009). An FTA between Mercosur and the EU would only be
Mercosur’s second, after it concluded an agreement with Israel in 2007 and
after embarking on South–South initiatives with Southern Africa, Asia – and
here in particular India – and the Middle East (Schelhase, 2008, p. 151).
Yet, over recent years another set of external challenges has emerged in
the form of a gradual merger of the Comunidad Andina (CAN – Andean
Community) with Mercosur, to form the Unión de Naciones de Suramérica
(UNASUR – Union of South American Nations), and the attempt to enlarge
Mercosur through the inclusion of Venezuela.12 In the case of UNASUR, the
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182 The Successes, Failures and Future of Mercosur
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Marc Schelhase 183
funds to aid economic and social development and cohesion,18 and externally,
through its trade negotiations, its planned merger with UNASUR, its incor-
poration of Venezuela and its South–South initiatives have deflected from its
main weakness. This is the inability of its members, particularly Argentina
and Brazil, to implement the bloc’s original aim of achieving a fully func-
tioning free-trade area, followed by a customs union and complemented by
a common market, in the wider context of a comprehensive development
agenda. As such, Mercosur’s ambitious external agenda has not provided the
glue that holds the organization together (Phillips, 2001, p. 577), but has
provided a fig leaf to cover the inability of the member states to implement
the internal reforms necessary to make Mercosur effective and develop a clear
and credible vision for the organization (Carranza, 2006, pp. 802–29). As
Enrique Iglesias, former President of the IDB, notes, ‘[Mercosur has] over ambi-
tious targets and little pragmatism. … We are trying to refine very ambitious
objectives which in practice are difficult to achieve’ (MercoPress, 2009g).
Mercosur as a significant developmental project is drifting as a result of
members’ diverging political and economic views about its aims and objec-
tives. The integration process is too dependent on presidential initiatives,
and successive attempts to re-launch the organization have not addressed the
institutional weaknesses and the lack of political will previously discussed.
However, by implementing the original aims of Mercosur, the member states
would provide a much more effective framework for significantly increasing
intra-regional trade, thus providing political and economic incentives to cre-
ate stronger and more robust regional governance structures while supporting
development. In turn, this would also better utilize the existing efforts of the
private sector and other civil society actors aimed at creating and sustaining
a vibrant, dynamic, and expanding regional vision, potentially encompassing
the whole of South America.
Notes
I would like to thank Andrew Cooper, Gordon Mace, and Tim Shaw for the invita-
tion to participate in the colloquium and the participants for their comments and
encouragement. Although I am affiliated with King’s College London, Defence Studies
Department, Joint Services Command and Staff College at the UK Defence Academy,
the analysis, opinions, and conclusions expressed or implied in this chapter are mine
and do not necessarily represent the views of the JSCSC, the UK Ministry of Defence,
or any other government agency.
1. The founding members of Mercosur – and still the only full members of the
organization – are Argentina, Brazil, Paraguay, and Uruguay. At the time of writing
(summer 2009), Venezuela’s full membership is still pending ratification in Brazil
and Paraguay (Klonsky and Hanson, 2009, p. 1). The delay is mainly due to con-
cerns about Venezuela’s democratic credentials under Hugo Chávez’s increasingly
authoritarian leadership. Bolivia, Chile, Colombia, Ecuador, and Peru are associated
members.
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184 The Successes, Failures and Future of Mercosur
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Marc Schelhase 185
from Year 3 onwards is US$ 100 million, with 27 per cent being contributed
by Argentina, 70 per cent by Brazil, 1 per cent by Paraguay, and 2 per cent by
Uruguay. The funds will be disbursed to the member states according to fixed
shares. Paraguay will receive 48 per cent of the money available, Uruguay 32 per
cent, and Argentina and Brazil 10 per cent each. For FOCEM see Fondo para la
Convergencia Estructural del Mercosur ⬍http://www.mercosur.int/focem⬎.
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Shaw
10
Ruling the North American Market:
NAFTA and its Extensions
Louis Bélanger and Richard Ouellet
In 1994, the governments of Canada, Mexico, and the US created what was
at that time a very modern free trade area by promulgating the entry into
force of NAFTA, the North American Free Trade Agreement. NAFTA was
essentially an amended version of the then five-year-old Canada–United
States Free Trade Agreement (CUSTA). The new agreement not only enlarged
CUSTA by adding Mexico as a third party; it made economic integration
stronger and deeper in the fields already opened to free trade and it covered
new sectors and new trade-related issues.
Aimed at creating ‘an expanded and secure market for the goods and
services produced in [the] territories’ of the signatory governments and at
‘ensur[ing] a predictable commercial framework for business planning and
investment’ (NAFTA, 1993, Preamble), NAFTA delivered the main commer-
cial and economic results it was designed to produce. It eliminated a fair
number of non-tariff barriers between Canada, the US, and Mexico. With the
exception of the dairy, poultry, egg, and sugar subsectors, NAFTA gradually
led to the elimination of the tariff duties that were previously applicable
between the three countries. It also brought the three national govern-
ments into a new era of cooperation and harmonization of standards,
regulations, and policies.
Chapter 4 and Annex 401 created a new regional set of rules of origin that
is easy to apply and that allowed North American importers to qualify more
goods for NAFTA preferential treatment (Hufbauer and Schott, 2005, p. 60).
Chapter 5 enhanced the harmonization of the procedures applied by the
customs authorities. In Chapters 8 and 9, the signatory governments agreed
upon important conditions of application for safeguard measures and for
standards-related measures. NAFTA also changed the practices followed by
federal government departments and entities of the NAFTA countries in
procuring goods, services or construction services for public uses. When the
estimated value of the contract exceeds specific thresholds, Chapter 10 on
Government Procurement prohibits discriminatory practices and forces the
187
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188 Ruling the North American Market
Shaw
Louis Bélanger and Richard Ouellet 189
procedures, but also that its governing bodies have not been granted the
rule-making capability needed to effectively tackle twenty-first century
trade issues such as regulatory harmonization. We will then examine some
regional cooperation mechanisms that can be considered as institutional
extensions of NAFTA, and point out that they offer practical, but imperfect,
attempts at compensating for NAFTA’s secondary rule-making deficit. This
post-NAFTA cooperation circumvents the original agreement’s rigidities by
operating exclusively on the basis of executive-to-executive arrangements.
However, while such an institutional strategy can bear fruit, in order to be
truly effective it would need to be pursued in a more comprehensive and
formal fashion.
In terms of the breadth of its sectoral coverage and the precision and depth
of its legal disciplines, NAFTA is an impressive piece of work. The agreement
is divided into 22 chapters, some of which are entirely devoted to one sector
or subsector of trade such as Energy and Basic Petrochemicals, Agriculture,
Services, Telecommunications, or Financial Services. Each chapter contains
highly detailed provisions that must be read in conjunction with definitions,
reservations or exceptions placed in numerous annexes. Some provisions go
into great detail, such as specifying that Bourbon Whiskey and Tennessee
Whiskey should be recognized as distinctive products (NAFTA, Annex 313),
or stating that, on Canadian territory, Canada Post Corporation has the
exclusive privilege to collect, transmit, and deliver ‘letters’ as defined in
the Canadian Letter Definition Regulations (NAFTA, Annex V, Schedule of
Canada). NAFTA was drawn up as a business contract (Pastor, 2001, p. 96)
full of complex and lengthy legal contortions (Weintraub, 1993).
These highly detailed pre-established rules are coupled with a quasi-absence
of ex-post rule-making capability (Bélanger, 2007). NAFTA is equipped with
a minister-level Free Trade Commission (FTC), a decentralized secretariat,
sophisticated dispute settlement mechanisms (DSMs), and several technical
working groups and committees (TWGs). However, none of these bodies
has real authority to create new rules or modify existing ones. The central
decision-making body provided for by NAFTA is the Free Trade Commission.
The FTC was not granted the power to directly amend the agreement, apart
from technical modifications to the classification of products for origin
determination or to the schedule for tariff elimination (NAFTA, 1993, Art.
414 & 512). The NAFTA agreement nonetheless gives the FTC the mandate
to monitor the implementation of the agreement and, to this end, grants
it some interpretative and procedural decision-making authority, which has
been used with great restraint. The FTC used its interpretative authority once,
in 2001, when it attempted to clarify some provisions pertaining to the opera-
tion of Chapter 11’s arbitration tribunals (Canada, 2001). The tribunals have
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Executive-level extensions
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Conclusion
When, during the Democratic primaries of 2008, Barack Obama raised the
argument that NAFTA should be renegotiated in order to include environ-
mental and labour obligations in the core text of the agreement, the response
from the Canadian government came swiftly and directly from the Prime
Minister himself. Stephen Harper declared that if Washington ‘made the mis-
take’ of opening the agreement (Reuters, 2009), Canada would present itself
at the negotiation table with its own list of amendments, notably the revo-
cation of NAFTA’s proportionality clause which guarantees exports of energy
at current levels to the US. Such a direct linkage between environmental
and labour issues and the trade of energy was possible because NAFTA is a
package deal, a single undertaking agreement. Any reopening of the deal
closed in 1992 and put into force in 1994 would ultimately be a full and
comprehensive one.
This episode, which has had no follow-up to date, perfectly illustrates
the political stakes that lie behind the legal and institutional state of affairs
described in this chapter. North American integration needs more than a
constitution written in stone, which is what NAFTA has offered to date.
In order to evolve and adapt to a globally competitive environment, it
needs a solid but more flexible institutional framework. As shown here,
developments that could not be reflected by amendments in the text of
NAFTA or obtained through its decision-making bodies have been negoti-
ated in more flexible agreements that have become extensions to NAFTA.
However, if the three signatory governments of NAFTA are going to accept
that, when required by circumstances, necessary changes to their commercial
relations will be worked out in à la carte agreements they should consider
the consequences.
As discussed above, the current trend of evolution in the North American
institutional framework is causing the gradual obsolescence of NAFTA
and the guarantees provided by its legal stature and recourses. It also signals
the erosion of the single undertaking approach guaranteed by NAFTA and
a return to ad hoc behaviours. For Canada and Mexico, this can only mean a
decrease in their bargaining power vis-à-vis the US on trade issues. It is the
single undertaking approach inherent to the NAFTA model that made it
possible for Prime Minister Harper to forcefully suggest a linkage between
Barack Obama’s preoccupations and Canada’s possible second thoughts on
energy security. Moreover, neglecting the comprehensive and coherent set
of rules provided for in the 1994 agreement, rather than building on it, will
inevitably reinforce the position of the two smaller North American partners
as ‘eternal supplicants’ (Gotlieb, 2004, p. 39), which is exactly what NAFTA
was intended to avoid.
This being said, we would not want to end this chapter leaving the
reader with the impression that NAFTA is the only trade agreement in the
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200 Ruling the North American Market
Note
This research was supported by grants from the Social Sciences and Humanities
Research Council and the ‘Fonds québécois de recherche sur la société et la culture’.
The authors would like to thank Kim Fontaine-Skronski for her excellent research
assistance, and the editors of this volume for judicious comments.
1. Negotiations that were later suspended due to irreconcilable positions on funda-
mental rights issues (GAO, 2008).
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11
New Forms of Integration: ALBA
Institutions and Mechanisms
Josette Altmann
Introduction
204
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Josette Altmann 205
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206 New Forms of Integration
briefly explaining the philosophy and main principles of ALBA. Second, its
main institutions and mechanisms are presented. The focus then shifts to the
impact of ALBA in the Latin American region. Finally, the chapter concludes
by reflecting on the future of ALBA as an integration proposal.
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208 New Forms of Integration
fuelled corruption and created even greater inequality. This has increased
the unequal distribution of wealth and privileges (see Table 11.2). At the
same time, this hinders institutional changes that would end privileges for
certain social, political, and business classes. These factors have generated
significant discontent and disillusionment with politics for many in the
region. To some extent, these sentiments are responsible for the governance
problems which affect the region and have made it easier for a new breed of
politician to emerge, many of them clearly anti-globalization, anti-US and
anti-free trade. It cannot be ignored, though, that the US continues to be the
main investor and the most dynamic recipient of exports for most of the
countries in the region, and that some of them, such as Venezuela, are major
trading partners (Altmann, 2008).
Trade agreements or treaties with the US are an important aspect of the
overseas agendas of the countries of the region (see Table 11.3). Following
the failure of the FTAA proposal, Washington has devised a kind of commer-
cial diplomacy with a strong ideological component. Lively debate has swept
the region in relation to free trade accords that prompted serious conflicts
in some sub-regional integration entities, such as Venezuela’s withdrawal
from the Andean Community of Nations (in April 2006) and the decision
by Uruguay and Paraguay to start talks with the US on possible trade trea-
ties due to asymmetries in Mercosur and the limited benefits the countries
obtain from belonging to that bloc. Venezuela has threatened to pull out
of Mercosur because of a trade focus that Chávez says ignores social issues.
Costa Rica has gone so far as to suffer a congressional and governmental
paralysis because of pre- and post-referendum debate on the free trade agree-
ment between Central America, the Dominican Republic and the US. While
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this agreement was based on the policy of trade, not aid, ALBA is anchored
more on the idea of a barter system rather than free trade.
In this context, Latin American integration processes are mired in doubt,
as evidenced by the region’s growing fragmentation. Rather than a rise of
the Left, as some observers suggest, what is occurring is the resurgence of
populism in some leaders plus the fragility in most democratic systems in
the region. Everything points to problems in terms of weak mechanisms for
political agreement, fights over leadership, and differing versions of regional
integration. Latin America has achieved a functional democracy without, at
the same time, improving its democratic governance. Economic integration
becomes a point of contention between the regional blocs because of trade
disputes and different ideas about joining the international system.
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210 New Forms of Integration
The efforts stemming from ALBA take concrete shape in three strategies. The
first one is the creation of a television station, Telesur, which is a political
project that seeks to fortify the ‘Bolivarian Revolution’ across the continent.
Its main goal is to become a multi–state company; though initially started
between the governments of Venezuela, Argentina, Uruguay, and Cuba, it has
the possibility of taking on new members. In the case of Uruguay, the contract
to be a part of Telesur was signed in 2005; however, the law to approve
its joining the organization has not yet been approved by the Uruguayan
Congress (Anon., 2009).
The second strategy is aimed at using oil as a foreign policy tool by
associating it with the process of consolidating ALBA through the Petro-
caribe Cooperation Agreement (established in 2005). This is a Venezuelan
initiative with the Caribbean countries whose main objective is to contribute
to energy security. In the context of Petrocaribe, energy agreements between
ALBA countries and Caribbean and Central American countries have also
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contributed to draw other countries closer to the policies and initiatives set
up in the framework of ALBA.
Petrocaribe has become ALBA’s conduit for implementing energy policy.
Clear evidence of this is a scale for financing oil sales on the basis of crude
prices. In conditions in which oil prices exceed US$ 50 a barrel, 40 per cent
of the transaction is financed, the payment period is extended to 25 years,
and the interest rate is reduced to 1 per cent; and if it is a short-term payment,
the period is extended from 30 to 90 days.
The third strategy is the creation of major national projects (proyectos
Grannacionales or PG) and companies (empresas Grannacionales, or EG) in which
two or more countries of ALBA participate. On 27 February 2009, during
the VIII Reunion of ALBA-TCP Permanent Political Commission, held in
Caracas, a new commission was established to follow up on the results and
impacts of the Grand National Projects. As of today, there are energy, food,
cultural, health, communication, commercial, industrial, and educational
projects (ALBA, 2007).
The Bank of the South (Banco del Sur) was founded on 9 December 2007 by
six South American countries (Argentina, Bolivia, Brazil, Ecuador, Paraguay, and
Venezuela). The idea was to devise an alternative to the International Monetary
Fund and the World Bank, with ‘financial sovereignty’ to control resources and
set terms for loans in South America. The plan is for the member countries
to come up with a total of US$ 800 million, but it has not been decided how
much each will contribute and where the money will come from.
The ALBA Bank was created on 26 January 2008 with initial reserves of
US$ 1 billion and the authorization for this sum to double. Its goal is to encour-
age economic and social integration by easing inequality and promoting a
more even distribution of investments, while urging Latin American countries
not to depend on the US economy or place their reserves in it. Hugo Chávez
criticized how the majority of governments use their reserves to pay their
debts with international organizations and put the rest in the form of US
treasury bonds or deposited them in US banks. With the ALBA Bank they
want to use the reserves of Latin American countries to finance projects in
the region (Bossi, 2008). Initially, it was established that the funds for the
ALBA Bank would come from each of the member countries. However, up
until now, the funds have come almost exclusively from Venezuela.
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212 New Forms of Integration
is high in almost every country, with the exceptions of Chile, Uruguay, and
Costa Rica. In Bolivia, Guatemala, Honduras, and Nicaragua, poverty affects
almost two-thirds of the population or more. This incidence is higher than
the Latin American average of 34.1 percent (in 2007). Also – except in the
cases of Chile, Uruguay, and Costa Rica – the gap between poverty and
extreme poverty is significant (see Table 11.4).
However, poverty is not the only problem. Significant differences in
the distribution of wealth continue to make Latin America an incredibly
unequal region. This is true not just among different countries, but also
within each country (see Table 11.5). On average, the poorest segment of the
population possesses less than 5 per cent of total wealth, while the richest
segment of the population possesses more than 50 per cent.
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Josette Altmann 213
Table 11.5 Latin America: Distribution of wealth in the wealthiest and poorest
segments of the population (%)
Country Year of the study Poorest segment Wealthiest segment
Argentinaa 2006 3.6 56.4
Bolivia 2007 2.0 60.5
Brazil 2007 2.6 63.3
Chile 2006 4.1 57.7
Colombia 2005 2.9 63.0
Costa Rica 2007 4.3 53.9
Dominican Republic 2007 2.8 59.9
Ecuador 2007 3.5 59.0
El Salvador 2004 3.5 53.5
Guatemala 2002 3.7 59.3
Honduras 2007 1.9 61.1
Mexico 2006 4.2 56.0
Nicaragua 2005 3.5 58.3
Panama 2007 3.0 56.3
Paraguay 2007 3.1 58.4
Peru 2003 3.8 55.2
Uruguayb 2007 4.9 50.3
Venezuela 2007 5.1 48.3
Note: a 31 urban agglomerations
b
Urban total
Source: CEPAL (2009)
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214 New Forms of Integration
practice the strong ideological tone of ALBA has generated some frictions
and divisions in each country, countries in Latin America are responding to
its proposals, particularly in the case of Petrocaribe as part of a process of
searching for commercial agreements that offer additional advantages to the
region (Castillo, 2008).
Under this state of affairs, Petrocaribe has turned into one of the major
sources of cooperation for Central America and the Caribbean. Much of
the fear that the initiative generated was related to the perception that
adherence would necessarily imply a commitment to the political and ideo-
logical project that its founders defend. However, it has been possible to
note that in the case of a few countries adherence to Petrocaribe and ALBA is
explained more by the economic benefits generated by the agreement than
by any ideological affiliations.
According to data from the Venezuelan Centre for Economic Research
(CIECA, after its initials in Spanish), the funds the country has allocated to
the member countries of ALBA since its foundation up to September 2008
have reached as high as US$ 32.952 million, a figure that represents 23.51
per cent of taxes collected by the Venezuelan government. This amount
reflects the total funds of ALBA, including Petrocaribe, and the estimate is
based on official announcements from the government. However, in some
instances, these announcements might not have been put into practice,
and in other cases, the formal announcement of the giving of resources to a
certain country does not include a specific total, which is why the estimate
could be even larger.
In all of the cases, though, these are large sums of money for all the
countries (see Table 11.6). However, it is important to note that the funds
shown in that table correspond to an official source of information. Up until
now there have not been outside analysis or verification about the fund-
ing provided. Currently FLACSO is working on a new project that seeks to
analyse the real role that ALBA has had in the region, both as an integration
proposal and also by means of the ALBA Bank.
Cuba 18,776
Bolivia 6724
Nicaragua 5523
ALBA Bank 1350
Haiti 440
Honduras 130
Dominica 8
Source: CIECA, cited in Olivares (2008)
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Josette Altmann 215
Both Cuba and Nicaragua are the main beneficiaries of ALBA. In Nicaragua,
aside from the economic benefits, there are shared ideological concepts, self-
proclaimed as ‘anti-imperialist’ and ‘anti-American’. However, even with
the constant invocation of these adjectives on behalf of President Daniel
Ortega, the truth is that the relationship between Nicaragua and the US still
stands, the Free Trade Agreement is still in force, and the main market for
the Nicaraguan entrepreneurs continues to be the US.
Despite its association with the integration initiatives promoted by
Venezuela and in spite of the signing of agreements with Iran, the status of
Nicaragua in other integration systems has not suffered any alterations.
Its relationship with the US – regarded as the main opponent of Venezuela’s
proposals – did not suffer either. In fact, the American Undersecretary of
Foreign Commerce, Christopher Padilla, visited Nicaragua in early 2008 and
stated that the relationship with Venezuela through the ALBA and Petrocaribe
is not a problem for Washington (Altmann, 2009).
Almost two years after first joining ALBA, the benefits obtained by
Nicaragua depend on who is judging the situation. For some opponents, the
benefits that have been generated in the social sphere have been very limited
and are mainly related to issues of energy and transport. The Venezuelan
energy aid is considered with doubt by these same groups who state that
the high dependency on oil has caused energy prices in these countries to
be some of the highest in the region. However, the defenders of ALBA state
that important social aid has been achieved due to the agreement, and that
oil shortages are now in the past.
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216 New Forms of Integration
Looking at Honduras, the other Central American country that has joined
ALBA, the economic rationale for joining on 25 August 2008 is demonstrated.
Honduras’s ideological position is quite different from the rest of the ALBA
countries – to the point that President Manuel Zelaya was removed from office
through a coup, partly due to his position vis-à-vis ALBA and democratic
institutions. At first, the Zelaya government seemed to represent the position
of the rest of the ALBA member countries, especially as Zelaya expressed his
solidarity with Bolivia when the country expelled the American ambassador
for allegedly interfering in domestic affairs. As a result, Zelaya delayed the
reception of credentials from the new US ambassador in Honduras, Hugo
Llorens. However, its position has gradually softened since which leads to
doubts about the real extent of its ideological adherence to ALBA.
In fact, on 19 September 2008, President Zelaya told a group of Honduran
entrepreneurs that the decision to join ALBA was in response to the coun-
try’s lack of resources. According to Zelaya, the Honduran private sector
did not help him and cooperation received from the World Bank or the
Inter-American Development Bank was insufficient. While the World Bank
offered to loan Honduras US$ 10m, the Venezuelan government gave it
a credit for US$ 130m after the country joined ALBA (Laínez, 2008). The
economic, rather than political, tone of the Honduras’s adherence to ALBA
can also be seen in the ratification of the agreement voted by the Honduran
Congress on 9 October 2008. The ratification included a series of restrictions
related to the use of the resources and the choice to reject any military and
political commitment that could be derived from ALBA.
On 28 June 2009 the aforementioned coup d’état in Honduras against
constitutional President Manuel Zelaya took place. Almost immediately the
members of ALBA called for a meeting of ALBA’s heads of state in Nicaragua
on the following day. They declared the actions taken by the Honduran Army,
Congress, Judicial Courts, Catholic Church, the Ombudsman, and almost
all the political institutions of the country illegal and unconstitutional.
ALBA also encouraged the Organization of American Sates (OAS) and the
international community (United Nations) to apply economic and politi-
cal sanctions to the country, as well as to denounce the coup and regard
the newly established government of Roberto Micheletti as a dictatorship
(ALBA, 2009c). The UN, OAS, Rio Group, Mercosur, SICA, ALBA, and other
Latin American regional institutions expressed their firm condemnation of
the coup (FLACSO, 2009). These institutions affirmed their recognition of
Manuel Zelaya as Honduras’s only legal president. In late September 2009,
ALBA declared its non-recognition of the de facto government’s calling of
elections in Honduras, which were set for that November. The ALBA presidents
supported Zelaya’s return to power as a main condition for the reintegration
of Honduras into international institutions.
At the VII ALBA Summit, which took place in Bolivia on 17 October
2009, ALBA took concrete steps to deal with the situation in Honduras.
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Josette Altmann 217
They agreed not to allow any of the main parties responsible for the coup
to enter any ALBA country; they would apply economic and commercial
sanctions; they would not recognize the winner of Honduras’s November
elections (Porfirio Lobo); they would promote international legal actions
against those responsible for the coup; and would call for summits of the
different integration initiatives in order to promote the agreement of sanc-
tions against any new government in Honduras (ALBA, 2009b). They also
reiterated that Manuel Zelaya was the only legitimate president of Honduras
and that he should be restored as the constitutional president so that he
could finish his presidential term (which was to end on 27 January 2010).
The opinions of the ALBA countries have been a part of attempts to find a
solution to the Honduran constitutional crisis.
In the cases of Costa Rica and Guatemala, their relationships with the
Venezuelan projects have been limited to Petrocaribe. Guatemala joined on
13 July 2008, and Costa Rica waits for its joining to be finalized. Neither of
these countries has shown a desire to construct a political-ideological alliance
with Venezuela through their adherence to ALBA.
After the incorporation of Honduras into ALBA and the announcement of
the possibility of Costa Rica joining Petrocaribe, attention has turned to El
Salvador, the only Central American country that has not built any type of
alliance with Venezuela. On 6 October 2008, former president Elías Antonio
Saca stated his respect for the choices of the other Central American coun-
tries, but added that in the case of El Salvador he did not find any benefit
in joining any of its initiatives. Mauricio Funes, the current president, has
yet to express his intentions as to whether or not the country will become
part of Venezuela’s initiatives, although he earlier expressed his willingness
to strengthen his country’s relations with Brazil and the US as well as with
Venezuela.
With regard to ALBA and the political-ideological implications of the
Venezuelan projects in Latin America, it is important to understand that
these have not manifested themselves, with the exception of Nicaragua and
Bolivia. But even in Nicaragua, as was previously stated, the anti-American
discourse of Ortega has not had serious consequences on the country’s
relationship with the US. And threats have not transcended mere discourses;
like the one formulated in January 2008, affirming that in the hypothetical
case of aggression from the US to Venezuela, all the member countries of
ALBA would create a military alliance.
What’s next?
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218 New Forms of Integration
the regional integration and the weakness of the national and regional
institutions.
The threat to democratic governance generated in some countries of
the region, like the one recently created in Nicaragua after the municipal
electoral process of November 2008, added an additional worrisome chal-
lenge to Latin America’s strengthening of its democratic systems. In this
case, it is important to emphasize that in Venezuela the electoral results
have not been questioned. Many people’s perspective – that the Obama
Administration will not be able to produce significant changes in its rela-
tions with the region (at least in the short term) – is also of concern. These
perceptions arose after the visits of US Vice-President Joseph Biden to Chile
and Costa Rica in March 2009. On these trips, he acknowledged that uni-
lateral actions from the US had ended, and that they were now willing to
listen more. However, he also asked the region to be patient in waiting for
US responses to regional demands, due to the difficult financial situation
the country is confronting as a result of the global crisis. Biden’s comments
are not good news for many Latin American countries because of the inter-
connectivity of their economies with the American economy and because
of the challenges the US economy faces due to the international financial
crisis as well as other problems such as unemployment, migration, and the
attendant impacts on remittances. All these imply a hard blow to the inter-
national economy as well as to Latin American economies, which had been
experiencing a gradual process of recuperation before the financial crisis.
At the last Summits of Heads of State and Government of the different
subregional blocs, it was decided to strengthen efforts to capture other markets
outside of the US. Therefore, markets such as China, Asia-Pacific, and Latin
American countries gain new relevance to the region.
In this context, the projects promoted by Venezuela represent a viable
option for creating new cooperative opportunities to face some of the con-
sequences caused by the new international situation. Petrocaribe has helped
to soften the shock of the financial crisis among its members. However, the
sustainability of this mechanism depends on how Venezuela confronts
the effects of the lowering of oil prices: despite Chávez’s discourse, many
specialists consider that Venezuela will not be able to maintain its levels of
expenditure if the oil prices go below US$ 75 per barrel.
The international financial crisis, the policies of the new US government
towards the region, and the political changes occurring in Latin America
open a new political cycle characterized by great polarizations and the
appearance of different types of leadership.
Even though the urge for integration manifests itself in political dialogue
and public acts, the difficulties of making this process a reality limit the
possibilities that Latin American countries have to deal with common prob-
lems, especially the ones derived from globalization processes. With greater
difficulties for facing in an integrated manner such regional and global
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Josette Altmann 219
Conclusions
Shaw
220 New Forms of Integration
Note
1. For further information on the history, philosophy, and principles of ALBA see
FLACSO (2007).
References
ALADI (Asociación Latinoamericana de Integración) (2008) Informe del Secretario General
sobre la evolución del proceso de integración regional durante el año 2007. [Online] Available
at http://www.aladi.org/nsfaladi/estudios.nsf/d61ca4566182909a032574a30051e5ba/
39f2505e2691d0a90325740f006b4edc/$FILE/2136.doc.
ALADI (2009) Sistema de Informaciones de Comercio Exterior (SICOEX). [Online]
Available at http://nt5000.aladi.org/siiespanol/.
ALBA (Alianza Bolivariana para los pueblos de nuestra América) (2009a) Acuerdos de
Integración. [Online] Available at http://www.alternativabolivariana.org/modules.php?
name=Content&pa=showpage&pid=230.
ALBA (2009b) VII Cumbre del ALBA. Cochabamba, Bolivia, 17 de octubre de 2009.
Available at http://www.flacso.org/fileadmin/usuarios/documentos/Integracion/
Octubre/Declaracion_VII_Cumbre_ALBA_sobre_Honduras.pdf.
ALBA (2009c) Proclama del Consejo Presidencial Extraordinario. Managua, Nicaragua, 29
de junio de 2009. Available at http://www.flacso.org/fileadmin/usuarios/documentos/
Integracion/Junio_09/Declaracion_Reunion_ALBA.pdf.
ALBA (2007) V Cumbre del ALBA. Proyecto Grannacional. Barquisimeto, República
Bolivariana de Venezuela 29 de abril de 2007. Available at http://www.alternativa
bolivariana.org/modules.php?name=News&file=article&sid=1802.
Altmann, J. (2008) The ALBA Bloc: An Alternative Project for Latin America? Translated from
Spanish. [Online] Real Instituto Elcano. Available at http://www.realinstitutoelcano.
org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/Elcano_in/Zonas_
in/Latin+America/ARI17-2008.
Altmann, J. (2009) El Alba, Petrocaribe y Centroamérica: ¿intereses comunes? Nueva
Sociedad, Nº 219. pp. 127–144. Also available at http://www.nuso.org/upload/articulos/
3587_1.pdf.
Anon. (2008) ‘Cooperación venezolana en Latinoamérica es mayor que la de EEUU’.
Terra [Online]. 29 September. Available at http://www.terra.com.ve/actualidad/
articulo/html/act1441413.htm.
Anon. (2009) ‘Uruguay no integrará directiva de Telesur durante 2009’, El Universal,
[Online]. 25 February. Available at http://www.eluniversal.com/2009/02/25/pol_
art_uruguay-no-integrara_1280633.shtml.
Bossi, F. (2008) ¿Qué es el ALBA? (Construyendo el ALBA desde los pueblos [Online]
Available at http://www.alternativabolivariana.org/modules.php?name=News&file
=article&sid=470.
Shaw
Josette Altmann 221
Castillo, R. (2008) CA: entre CAFTA y Petrocaribe. El Confidencial [Online] 12–18 October.
Available at: http://www.confidencial.com.ni/2008-605/economia_605.html.
CEPAL (Comisión Económica para América Latina y el Caribe) (2008) Social Panorama
of Latin America 2008. [Online] Available at http://www.eclac.org/cgi-bin/getProd.
asp?xml=/publicaciones/xml/3/34733/P34733.xml&xsl=/dds/tpl/p9f.xsl&base=/
tpl/top-bottom.xslt.
CEPAL (2009) Statistical yearbook for Latin America and the Caribbean 2008. [Online]
Available at http://www.eclac.org/cgi-bin/getProd.asp?xml=/publicaciones/xml/
7/35437/P35437.xml&xsl=/deype/tpl-i/p9f.xsl&base=/tpl/top-bottom.xslt.
Comunidad Andina (2008) Exportaciones Intra y Extra Comunitarias 2007. Documento
Estadístico. [Online] Available at http://intranet.comunidadandina.org/IDocumentos/
c_Newdocs.asp?GruDoc=13.
DIRECON (Dirección General de Relaciones Económicas Internacionales) (2008)
Comercio Exterior de Chile. Segundo Trimestre 2008. [Online] Available at http://www.
sice.oas.org/ctyindex/CHL/DIRECON20082_s.pdf.
FLACSO (Facultad Latinoamericana de Ciencias Sociales) (2007) Dossier ALBA.
Alternativa Bolivariana para América Latina. San José, Costa Rica: FLACSO-Secretaría
General. Also available at http://www.flacso.org/integracion/cuadernos/alba.pdf.
FLACSO (Facultad Latinoamericana de Ciencias Sociales) (2009) Crisis hondureña:
diálogo estancado. Available at http://www.flacso.org/programas-y-proyectos/observ
atorio-integracion-regional-latinoamericana-oirla/noticias-de-integracion-regional/
noticia-integracion/se-estanca-dialogo-en-honduras/.
Gómez, O. (2008) FMI: Nicaragua el más beneficiado por ALBA. El Nuevo Diario. [Online]
26 October. Available at http://www.elnuevodiario.com.ni/nacionales/30717.
INEGI (Instituto Nacional de Estadística, Geografía e Informática). www.inegi.gob.mx.
Laínez, L. (2008) Zelaya pactó con Chávez por falta de dinero. La Prensa Gráfica. [Online]
28 September. Available at http://www.laprensagrafica.net/lodeldia/20080928/
18468.asp.
Olivares, F. (2008) Cuánto cuesta el ALBA. El Universal, [Online] 28 September.
Available at: http://www.eluniversal.com/2008/09/28/pol_art_cuanto-cuesta-el-alb_
1062204.shtml.
Rojas-Aravena, F. (2007) La integración regional: Un Proyecto Político Estratégico. III Informe
del Secretario General de FLACSO. San José, Costa Rica: FLACSO-Secretaría General.
Also available at http://www.flacso.org/download/III-INFORME-SECRETARIO-
GENERAL-2007.pdf.
Rojas-Aravena, F. (2008) Integración en América Latina: Acciones y Omisiones; Conflictos
y Cooperación. IV Informe del Secretario General de FLACSO. San José, Costa Rica:
FLACSO-Secretaría General. Also available at http://www.flacso.org/imagenes/iv_
informe_sg.pdf.
SIECA (Secretaría de Integración Económica Centroamericana) (2008) Estado de
Situación de la Integración Económica Centroamericana. [Online] Available at http://
www.sieca.org.gt/site/VisorDocs.aspx?IDDOC=Cache/17990000002788/17990000
002788.swf.
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Part IV
Reconstructing a Regional System
for the Americas
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12
Middle Powers and Hemispheric
Diplomacy: Towards an A10
Jorge Heine
The year 2009 marked a turning point in inter-American affairs. The inaugu-
ration of President Barack Obama, the United States’s first black president,
on 20 January; the Fifth Summit of the Americas in Port-of-Spain, held
from 17–19 April; the lifting of the Organization of American States (OAS)
1962 resolution that suspended Cuba’s membership, on 3 June; and the
subsequent unanimous suspension of Honduras on account of the 28 June
military coup there; all combined to generate a new dynamic in the Western
Hemisphere. The present situation is very different from the low point reached
following the Fourth Summit of the Americas held in Mar del Plata, Argentina
in October 2005, remembered for, among other things, President George W.
Bush ostentatiously taking off his earphones, refusing to listen to the speeches
of his Latin American counterparts.
The very fact that US Secretary of State Hillary Clinton attended the June
2009 inauguration of President Mauricio Funes in El Salvador (the candidate of
the former guerrilla-movement-turned-political-party Frente Farabundo Martí
de Liberación Nacional (FMLN) and that country’s first left-wing president) is
an indication of the considerable changes that have taken place in US–Latin
American relations under the Obama administration. Moreover, it was on this
occasion that Secretary Clinton said: ‘Some would say that President Obama
is centre-left, and that of course means that we will work well with countries
that share our commitment to improve and enhance human potential’.
The election of Barack Obama generated great expectations in Latin
America, as in the rest of the world.1 In the US, where Hispanics now com-
prise 15 per cent of the population, and where Hispanic voters have not
always been ready to throw their support behind black candidates, Obama
did well (better than Al Gore in 2000 and John Kerry in 2004), beating
Senator John McCain in Florida.
President Obama himself, with a Kenyan father and a Kansas-born mother,
born in Hawaii and partly raised in Indonesia, has a personal trajectory that
enhances his understanding of international affairs in a way that President
George W. Bush’s (who first set foot in London, Great Britain as president)
225
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226 Middle Powers and Hemispheric Diplomacy
did not. Obama’s African roots and his exposure to Asia have made him
especially sensitive to issues affecting the Global South (see Obama, 2004).
In one sense, then, these changes were predictable. In another, however,
they were not. For the vast majority of observers, Obama’s packed agenda,
dominated by the global economic crisis that began in 2008, two wars (in Iraq
and Afghanistan) and an ambitious programme of domestic reforms, meant
that the Hemisphere would get short shrift (see Lowenthal et al., 2009). Yet,
from January to September, President Obama made a state visit to Mexico,
took part in the Fifth Summit of the Americas in Port-of-Spain, hosted at the
White House Presidents Luiz Inácio Lula da Silva of Brazil, Michelle Bachelet
of Chile, and Álvaro Uribe of Colombia, regularized diplomatic relations with
Venezuela, went along with the unanimous lifting of the 1962 OAS resolu-
tion that suspended Cuba, and took measures to ease US links with Cuba.
The latter move, in particular, reflects a considerable change from pre-
vious US policies. The obstacles within the US to these changes are not
minor. The gap between current Latin American realities and the way
they are perceived by many opinion-makers in the US is considerable, and
was reflected in the Port-of-Spain summit. The fact that President Obama
rose from his seat to respond to the greeting of President Hugo Chávez
of Venezuela, that he smiled in so doing and that he accepted a gift from
his Venezuelan counterpart, generated considerable criticism, even in the
mainstream US media.2
And this leads us to the new Latin America that has emerged in the course
of this decade, marked by the distancing, if not downright estrangement,
from the US. This chapter addresses how the changed dynamics of inter-
American politics are affecting hemispheric cooperation and how best to
redress this situation. The state of affairs in Latin America has transformed
the region’s relationship with its northern neighbours. A ‘new Latin America’
has evolved that is more assertive in global affairs and international relations.
Region-wide rejection of the Washington Consensus has diminished reliance
on the US and overt anti-US sentiment appears in countries across the region.
The region’s hierarchy has also begun to shift, with some countries, such as
Canada and Chile, becoming more active and other countries’ importance
rising and falling – Brazil and Argentina, respectively.
Latin America’s resurgence, combined with the obstacles forced upon it
by the OAS and the Summit of the Americas (SOA) process, have left current
inter-American institutions at a standstill. At the same time, Latin American
summitry has flourished as groupings such as the Rio Group, ALBA, UNASUR,
and Mercosur allow the countries of the region to meet – although there are
concerns of summitry overload. All of this has created the need for a sustain-
able and effective pan-American summit to deal with issues on a hemispheric
level – common concerns, from the environment, to security, to drug traffick-
ing require transnational responses. This chapter argues that the creation of
an A10 – a small, informal grouping of Western hemispheric countries – can
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228 Middle Powers and Hemispheric Diplomacy
None of this means that Latin America does not still face enormous chal-
lenges or that it does not still have a long way to go before becoming fully
developed. It just means that some progress has been made and that some
learning from past mistakes has taken place.
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Jorge Heine 229
Obama’s challenges
The fact that the US no longer plays the dominant role it played in the
region in the past does not mean that it has become irrelevant for it. A fifth
of all US foreign trade (the US is still the largest economy in the world, with
a quarter of the world’s product) is with Latin America. Close to a third
(30%) of its oil imports come from the region, a larger share than from the
Middle East. Of the 45 million US residents born abroad, 18 million are Latin
Americans. Many Latin American and Caribbean nations (especially Mexico,
Guatemala, El Salvador. and Guyana) have come to depend very heavily on
remittances, whose value in some cases reaches as much as 20 per cent of the
GDP of the recipient country, and whose total value is only slightly less than
the overall FDI flow into the region in any given year.5
Moreover, the dependency on the US by countries like Mexico, as well as
those of Central America and the Caribbean, has increased in the course of
the past 20 years, something very different to what has occurred in South
America, and especially in the Southern Cone. Whereas some 80 per cent of
Mexico’s exports go to the US, less than 20 per cent of Chile’s exports do so,
despite the existence of a US–Chile FTA, in effect since 2003.
In short, and despite the considerable progress that has taken place in
Latin America in the past decade and the less prominent role of the US in
the hemisphere, there continues to be a shared problematique. In addition to
Latin America’s own development challenges and the degree to which they
are linked to the US economy and society (in matters such as immigration,
drug trafficking, and crime, among others), there are also broader transna-
tional challenges that demand collective action and some degree of policy
coordination (such as those of poverty, energy, and climate change).
President Obama and Secretary Clinton, two deft politicians, have also
grasped something else. The fact that there are no major crises, wars, or terror-
ism in Latin America means that the region can engage Washington in a dif-
ferent type of relationship, one based on maturity and mutual respect. It is thus
ideal for the new US administration to display its new diplomatic approach, based
on dialogue, multilateralism, and joint efforts to address common challenges,
with the real possibility of showing results in the near future – something less
easy to achieve in the more conflict-ridden areas of the world.
The question then becomes one about how to move ahead and take
advantage of this window of opportunity. As important as the content of
the newly emerging inter-American agenda is the process to manage it. And
this is where middle powers come in.
Canada is, of course, the ultimate middle power, one with a very distinctive
foreign policy tradition. A commitment to multilateralism and the rule of
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Jorge Heine 231
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232 Middle Powers and Hemispheric Diplomacy
Chile’s emergence
Yet, over the past 20 years, there has been another South American nation
that has emerged as a strong contender for middle-power status, namely
Chile. The fastest growing economy outside Asia during the past two decades,
Chile is one of the countries in the developing world that has managed to
make the most of the opportunities offered by globalization. It has done so
through an aggressive international economic policy (leading it to become
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Jorge Heine 233
the country with the highest number of FTAs – 56 as of last count in 2009)
as well as diplomatic ‘charm offensives’, that have allowed it to increase its
exports through this market access from US$ 9 billion in 1990 to US$ 63
billion in 2008, and to attract considerable amounts of FDI, whose stock
is now 65 per cent of GDP, one of the highest in the world. A key factor
here has been the diversification of Chile’s foreign markets. In 2007, China
displaced the US as Chile’s largest export market, and four of Chile’s largest
export markets that year were to be found in Asia (first China, third Japan,
fifth South Korea, and tenth India).11
Revealingly, it has been this very diversification of markets and open-
ing to global opportunities that became a source of criticism, both in the
region and at home. Chile is the one country in Latin America that is not a
full member of any regional integration scheme (although it has FTAs with
many of them). It explicitly declined invitations to join Mercosur when
it was first established in 1991, and once again in 2000 (it did become
an associate member in 1996), and it is often accused of prioritizing Asia
(which gets 40% of its exports) over Latin America (which gets only 20%).
At home, the centre-left ruling coalition (the Concertación de Partidos por
la Democracia) which has ruled the country since 1990, has also exposed
itself to the critique that it doesn’t pay enough attention to the region, a
sensitive subject given the Pinochet Regime’s explicit distancing itself from
Latin America on many fronts.
One result of this is that under the presidencies of Ricardo Lagos (2000–6)
and Michelle Bachelet (2006–10), Chile continued with its global international
trade policy, but added to it a more visible commitment to Latin American
concerns. The election of Chilean Home Affairs Minister José Miguel Insulza as
secretary general of the OAS in 2005, in a hard-fought election against Mexican
Foreign Minister Luis Derbez (the first time an OAS SG who was not the pre-
ferred candidate of Washington was elected to the office) was a significant
instance of this (see Heine, 2006). Something similar can be said of President
Michelle Bachelet’s election as the first chair of the Unión Sudamericana de
Naciones (UNASUR) in 2008, a new entity seen by some as designed to assert
a measure of South American independence from North America.
And although the contrast between this policy and the one followed by
Chile’s military regime (1973–90) is considerable, Chile has been able to
draw on its own, rich foreign policy traditions from the pre-1973 period to
assert its commitment to certain permanent principles in the conduct of
its foreign relations, principles that have stood it in good stead in the new,
twenty-first century environment. These include the rule of international
law, the principle of non-intervention, the significance of multilateral insti-
tutions, and that of pacta sunt servanda, principles which are not too different
from those that have inspired Canadian foreign policy.
However, Chile’s strong democratic institutions and political stability as
well as its prosperous economy, mean that the ‘national question’, if not
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234 Middle Powers and Hemispheric Diplomacy
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Jorge Heine 235
much gets done, where overheads and pensions eat up much of an already
meagre budget, and innovation and initiative are scarce commodities.
That said, there is little doubt that, at a time of increasing political differ-
ences within the Americas, and despite its somewhat chequered past, the
OAS has raised its profile as the Western Hemisphere’s premier regional
forum, taking up such ‘hot-button’ issues as ‘bringing Cuba back in’ and
contending with the Honduras crisis in a forceful and decisive manner. As
Feinberg and Haslam (2007) have shown, the OAS has also taken on with
great verve the assigned task of becoming the administrative structure for
the SOA process, and redefined its mission accordingly, giving a new impe-
tus to the organization.
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236 Middle Powers and Hemispheric Diplomacy
The main concern of this chapter though is not just with the substance
of this new agenda, but with restoring a semblance of intra-hemispheric
dialogue. Ever since its launch in 1994, the Summit of the Americas (SOA)
process has been the linchpin of it. Yet, it has now reached a stage of ever-
diminishing returns. The SOA from the very beginning was linked to the
FTAA project. Now that the latter is dead, this cannot but affect the SOA.
But the crisis of the latter goes beyond that. In some ways, the SOA is the
Americas’s equivalent to the United Nations General Assembly, only held
every four years rather than every September. To sit 34 heads of government
around a table to discuss common concerns is not a good working formula.
To hold it every four years does not help to make it more operational either:
most heads will attend only one SOA in their term of office. There are thus
few incentives for follow-up. Add to that an under-funded and thus unem-
powered secretariat – with a US$ 700,000 yearly budget – and you do not
exactly end up with a winning formula.
Shaw
Jorge Heine 237
item on the G20’s agenda), this is unlikely to occur. Yet, the seeds of an
interesting idea are there.
Along the same lines, one report on the state of US–Latin American rela-
tions has suggested the creation of an A8 – that is, an informal group, along
the lines of the G8, that would meet once a year, bringing together eight
heads of government from around the hemisphere to address issues of com-
mon concern (see The Brookings Institution, 2008). I would expand it to an
A10. Few would question the sense of common purpose and even identity
that the G8 created among the world’s leading industrialized democracies
in the course of its more than 30 years of existence. Their yearly meetings,
generally in July, elicit considerable media attention. More importantly,
they are highly valued by the principals who take part in them because they
are precisely what the UNGA and the SOA are not: an occasion to exchange
views informally, within a small group, with no ready-made speeches,
among colleagues, with no attempts at public posturing. The premium is on
private exchanges among top leaders.
A number of observers have underscored the cyclical nature of inter-
American relations. Bursts of seeming energy and creativity in the develop-
ment of hemispheric institutions are followed by steep downturns, periods
in which nothing much happens, or, even worse, acrimony and bitterness
between North and South prevail. The contrast between the state of inter-
American relations in the 1990s and what obtained in the first decade of this
century is a prime example of this cycle.
The reasons for these pendular movements that go from the extremes of
euphoria and warm optimism to near-depression are manifold. One of them
is the lack of trust between North and South, between the developed part
of the Americas (i.e. the US and Canada) and the developing one (i.e. all
the rest). No other part of the world presents such a stark contrast between
its component units as the Western Hemisphere in terms of the enormous
income and wealth disparities between North and South of the Rio Grande.
To that one should add the cultural and linguistic differences between an
English and French-speaking North and a largely Spanish and Portuguese-
speaking South.
According to this view, the problem arises when, at certain moments, the US
wishes to believe in the existence of certain common values in the Americas,
a belief that is taken at face value by many Latin American nations eager ‘to
score points’ with Uncle Sam – only to be disappointed when the latter returns
to its traditional unilateralist behaviour as soon as the opportunity arises.
From John F. Kennedy’s Alliance for Progress to Lyndon Johnson’s invasion of
the Dominican Republic, from Jimmy Carter’s human rights agenda to Ronald
Reagan’s consorting with dictators, from Bill Clinton’s NAFTA moment to
George W. Bush’s Mar del Plata nadir, the pattern is much the same.
If that is the case, and distrust has been the hallmark between the leaders
of the Americas, it follows that there is a need to create the conditions for
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238 Middle Powers and Hemispheric Diplomacy
establishing this trust in the first place. These conditions do not obtain in
large meetings with set speeches aimed at public opinion back home rather
than at the presumed interlocutors in the room. They do exist in the equiva-
lent of the G8 meetings, which have been so successful that many others
wanted to join as well.13 To compress the 35 countries in the Hemisphere
into a working group of ten would not be an easy exercise. But then, nobody
said harnessing hemispheric regionalism was a cakewalk; the Rio Group
started much the same way, and middle powers are better placed than most
to make such a project happen.
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Jorge Heine 239
Conclusion
Notes
1. For some reflections on these Latin American expectations, see the special issue
of Foreign Affairs Latinoamérica 8:4 (2008), ‘Propuestas para un mundo sin Bush’,
and especially the articles by Jorge Castañeda, Luis Maira, and Roberto Russell.
2. The occasion has even given rise to the term ‘to pull a Chávez’, and is referred
to by The New York Times as ‘the now-infamous handshake’ – an extraordinary
expression for the meeting of two heads of state in a summit whose very pur-
pose is for participating heads of state to, well, meet each other. See Cooper, H.
(2009).
3. For a broader discussion of these trends, see Cooper and Heine (2009).
4. For the case of China, which has been at the forefront of this trend, see Ellis
(2009); for India, see Heine (2009a).
5. For these figures, see Inter-American Dialogue (2009). A useful companion report
is Council on Foreign Relations (2008).
6. On Canadian foreign policy, see Tomlin et al. (2008) and Bothwell and Daudelin
(2009).
7. This and the following paragraph draw on Heine, (2009b).
8. For a comprehensive assessment of the state of Brazil’s domestic and foreign
policy challenges, see Foreign Affairs Latinoamérica (2009).
9. As one scholar put it, ‘Argentina has historically had an erratic, inconsistent
and often ambiguous foreign policy. Examples abound of frequent and sudden
changes in orientation, opposite stances along time (within and across admin-
istrations), contradictory positions depending on issues/countries and swinging
between alignment and confrontation with the US’ (Margheritis, 2007).
10. For a devastating critique of Argentina’s foreign policy under President Kirchner
by one of Argentina’s leading IR specialists, see La Nación (2006).
11. On Chile’s international trade policy, see Heine (2009c); on relations with India,
see Heine (2007).
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240 Middle Powers and Hemispheric Diplomacy
12. In addition to the ones mentioned above (Council on Foreign Relations [2008]
and the Inter-American Dialogue [2009]) one should also include The Brookings
Institution, (2008).
13. The result of that, after many somewhat awkward combinations like the ‘Eight
plus Five’ and others, has been, of course, the G20, which met for the first time in
Washington, DC in November 2008, and subsequently in London in April 2009
and in Pittsburgh in September 2009.
References
Aggarwal, Manmohan (2008) ‘The BRICSAM Countries and Changing Economic
Power: Scenarios to 2050’, CIGI Working Paper 39.
Bothwell, Robert and Jean Daudelin (eds) (2009) Canada Among Nations 2008: 100
Years of Canadian Foreign Policy. Montreal and Kingston: McGill-Queens University
Press.
Canada and the Americas: Priorities and Progress (2009) Department of Foreign Affairs
and International Trade. Ottawa: Government of Canada.
Canadian Foreign Policy (2008) ‘Special Issue: Canada and the Americas: Defining
Re-Engagement’, 14:3 (Fall).
Cooper, Andrew F. (2009) ‘Middle Powers: Squeezed Out or Adaptive?’, Public
Diplomacy 1:2 (Summer), pp. 29–34.
Cooper, Andrew F. and Jorge Heine (eds) (2009) Which Way Latin America? Hemispheric
Politics Meets Globalization. Tokyo: United Nations University Press.
Cooper, Helen (2009) ‘The Politics of Face Time’, The New York Times, 20 September.
Council on Foreign Relations (2008) ‘US-Latin American Relations: A New Direction
for a New Reality’, Independent Task Force Report 60.
Daudelin, Jean (2007) ‘Canada and the Americas: A Time for Modesty’, Behind the
Headlines. Canadian Institute of International Affairs, 64 (3).
Ellis, R. Evan (2009) China in Latin America: The Whats & Wherefores. Boulder: Lynne
Rienner.
Feinberg, Richard and Paul Haslam (2007) ‘Problems of Coordination: The OAS and
the IDB’, in Gordon Mace, Jean-Philippe Thérien and Paul Haslam (eds) Governing the
Americas: Assessing Multilateral Institutions. Boulder, CO: Lynne Rienner, pp. 51–70.
Foreign Affairs Latinoamérica (2009) ‘Brasil: ¿potencia americana?’ 9:2.
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in Edward Newman, Ramesh Thakur and John Triman (eds) Multilateralism under
Challenge: Power, International Order and Structural Change. Tokyo: United Nations
University Press, pp. 481–503.
Heine, Jorge (2007) ‘From the Southern Cone to South Asia: Growing Links between
Chile and India’, Indian Foreign Affairs Journal 2:1 (January–March), pp. 29–43.
Heine, Jorge (2009a) ‘Playing the India Card’, in Andrew F. Cooper and Jorge Heine
(eds), Which Way Latin America? Hemispheric Politics Meets Globalization. Tokyo:
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Heine, Jorge (2009b) ‘Middle Powers and Conceptual Leadership’ Public Diplomacy 1:2
(Summer), pp. 41–5.
Heine, Jorge (2009c) ‘Chile’s International Trade Policy’, World Focus 350 (February).
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entrevista, 24 September.
Shaw
Jorge Heine 241
Shaw
13
What Role for the Private Sector in
Inter-American Multilateralism?
Richard E. Feinberg
242
Shaw
Richard E. Feinberg 243
To invite the member states to continue the dialogue with the private
sector and to strengthen the means of dialogue with that sector, at the
national level, in OAS activities, and in the Summits of the Americas
process. … To continue supporting the dialogue with the ministers of
foreign affairs before the inaugural sessions of the OAS General Assembly
and the Summits of the Americas. … To continue exploring ways in
which linkages with the private sector may contribute to attainment of
the essential purposes of the Organization, in particular those that relate
to integral development.
(OAS, 2006)
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244 What Role for the Private Sector?
the OAS does and should regularly engage other components of civil society,
many of whom can join with private firms and government entities in forming
more inclusive and more effective partnerships.
Such partnerships have been instituted and continue to evolve in other
regions, in both the North and South from the UN Global Compact to Africa
and Asia as well as European and hemispheric private–public partnerships
(PPPs). These have increasingly become the focus of analytic and applied
attention (see Utting and Marques, 2009; Utting, 2008). In particular, Utting
(2008) abstracts several distinctive types of contemporary global regulation:
certification schemes, global framework agreements, and standard setting
(see also Utting and Zammit, 2009). Such typologies inform and contrast
with those around international agencies as identified from the hemisphere
in the third section below.
Historical context
Historically, relations with the hemisphere’s private sector have not been at
the core of the OAS’s mission or programmes. The world’s oldest regional
multilateral institution, the OAS, is the premier multilateral political institu-
tion of the Western Hemisphere. The most senior governing body of the
OAS, the General Assembly, consists of the foreign ministers of the 34 active
member states. As the OAS’s primary responsibilities lie in the spheres of
foreign policy and the politics of inter-American relations, its primary rela-
tions have been with member governments and their foreign ministries and
with such inter-American judicial institutions as the Inter-American Court of
Human Rights. Moreover, as over three dozen interviews for this study with
officials of the OAS and executives of the private sector made clear, there are
significant gaps between their respective cultures and incentives. In seeking
to increase its engagement with the private sector, the OAS will have to work
forcefully and creatively to overcome these inherent roadblocks.
Most importantly, today the OAS is desperately short of financial resources,
an essential input into business investment and operations, as member states
for well over a decade have nearly frozen its regular budget in nominal terms –
less than US$ 90 million in 2008 – and hence have allowed it to shrink in
real purchasing power.1 A high percentage of this restricted budget is allocated
to personnel, leaving an even smaller amount for programmatic spending
and much of the programmatic spending is allocated to projects undertaken
by governments or NGOs. Resources available for partnering with business,
therefore, are very modest.
The Summits of the Americas, initiated in Miami in 1994, opened new
horizons for both the OAS as an institution and for engagement of the private
sector in the inter-American System. Summits drew the heads of state and gov-
ernment into an expanded inter-American system, which came to include not
only the OAS and related organs and institutions but also the summits and
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Richard E. Feinberg 245
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246 What Role for the Private Sector?
1 Cooperation between public authorities and the private sector in order to ensure
the financing, construction, renovation or management of physical infrastruc-
ture. These PPPs may take a number of forms: management and service
contracts, leasing, concessions, and build-operate-transfer (BOT) contracts.
A study by the Pacific Economic Cooperation Council (PECC), a predecessor
and observer to the APEC process, concluded that successful PPPs require
trust and cooperation among the parties, a clear definition of the roles of
all stakeholders involved, transparency of procedures, performance evalu-
ation criteria, review mechanisms, and a framework for the settlement of
disputes (PECC, 2006).
2 Cooperation across sectors to address social issues. Cross-sector social-oriented
partnerships (CSSPs), often involving civil society organizations as well
as public and corporate entities, address challenges such as education,
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Richard E. Feinberg 247
For either category of PPP, public policy plays a critical role in establishing
an enabling framework. Governments can provide regulatory stability and
predictability, and a legal framework for contract enforcement and remedies.
Governments can catalyze PPPs through their powers of persuasion and
convocation, education and training, and through fiscal and other monetary
incentives. Governments can set standards and encourage monitoring, evalu-
ation, and public reporting of PPPs. For example, the Multilateral Investment
Fund (MIF) of the IDB is preparing a project to help the government of
Trinidad and Tobago to promote PPPs in infrastructure, by strengthening its
capacity to design and regulate PPP project performance.
In light of such programmes and lessons learned from best practices, there
are a number of steps that the OAS and the inter-American system can take
to promote PPPs, building on valuable existing programmes. In particular,
Summits offer a special opportunity to bring together public and private
actors, and to motivate them to participate in the implementation of initia-
tives that arise in the high-profile summit context. The summitry process
(as will be discussed at greater length below) contains a number of follow-up
mechanisms, including ministerial meetings and possibly issue- and sector-
platforms, which can cultivate PPPs.
In this regard, it is important to take into account the Inter-American
Development Bank, notably its Multilateral Investment Fund (MIF), which
is already engaged in promoting PPPs and has the huge advantage of com-
manding large budgets that facilitate dialogues with governments and that
offer incentives to private firms.5 Therefore:
• In seeking to encourage the formation of PPPs, the OAS should seek to coor-
dinate initiatives and programmes with the Inter-American Development
Bank (IDB). To encourage such coordination, leaders at the Summit should
set it in motion, and the top management of both institutions should
establish strong inter-agency mechanisms that foster programmatic
collaboration between the two Washington, DC-based institutions.
• Together, the OAS and IDB can encourage member states to establish
well-designed enabling frameworks that facilitate the formation of PPPs.
Frameworks can apply to the national and local levels of government,
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248 What Role for the Private Sector?
The periodic Summits of the Americas are the highest form of regional
multilateralism in the Western Hemisphere, as they assemble the leaders of
the states to engage in collective decision making. Initiated in their current
form in Miami (1994), subsequent summits have been held in Santiago,
Chile (1998), Quebec, Canada (2001), Monterrey, Mexico (2004), Mar del
Plata, Argentina (2005), and Trinidad and Tobago (2009). Institutionalized
summitry involves not only these periodic meetings of state leaders but also
related implementation mechanisms (secretariats, oversight instruments,
working groups, ministerial meetings, conferences, projects, consultative
groups, multi-stakeholder partnerships), which provide organic continuity
between summits.
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Richard E. Feinberg 249
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250 What Role for the Private Sector?
Pre-summit consultations
The OAS organizes two series of opportunities for private sector inputs into
the summit agenda, as with other components of civil society: a series of
pre-summit consultations, which for businesses are organized at the regional
level; and the Private Sector Forum immediately prior to the summit itself.
Since summit documents are largely complete prior to the PSF, the earlier
series of consultations offers more propitious opportunities for actually
influencing the summit drafts.
The OAS General Secretariat, through its Department of Trade and
Tourism (DTT), and the Summits of the Americas Secretariat, in coordi-
nation with the Trinidad and Tobago National Secretariat for the Fifth
SOA, organized a series of consultations with various regional and sub-
regional business associations including: the Caribbean Association of
Industry and Commerce (CAIC); the Federation of Chambers and Industry
Associations of Central America (FECAICA); the Federation of Chambers
of Commerce of Central America (FECAMCO); the Economic-Social
Consultative Forum of Mercosur (FCES); the Council of the Americas; the
Andean Consultative Business Council; the Latin American Organization
for Micro, Small and Medium Enterprises (OLAMP); the Business Council
of Latin America (CEAL); and the Business Technical Advisory Committee
on Labour Matters (CEATAL). Inputs were collected and distributed to
member countries, and private sector representatives were invited to make
a presentation at a SIRG preparatory session in Sonsonate, El Salvador on
11–12 December 2008.6
However, this robust series of pre-summit consultations is not adequately
wedded to the PSF. No doubt the organizers of the PSF take into account
the pre-summit soundings in drafting the agenda for the PSF. But more
could be done to knit the two mechanisms together. For example, the
various business associations consulted during the pre-summit meetings
might be asked to organize one or more of the PSF panel discussions. There
might also be an opportunity at the PSF for business leaders to compare
and contrast their earlier recommendations with the final summit texts;
where their recommendations successfully found their way into the sum-
mit texts, the private sector could focus on next steps, such as the roles the
private sector could play in further advancing their proposals, including
through summit-established mechanisms, in their implementation at
the regional and national levels. As such the Private Sector Forum should
move forward to identify specific PPPs, linked to the final summit text.
A cross-cutting theme of the PSF, of its keynote speakers and panellists,
could be the usefulness of PPPs in driving summit initiatives. The PSF
would not, itself, attempt to implement projects (it lacks the means to do
so); rather, it would seek to identify summit initiatives where private firms
might usefully engage, and partner with national or regional agencies, to
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Richard E. Feinberg 251
The OAS has several entities and affiliated bodies that engage with the
private sector through dialogue and projects. These include its Executive
Secretariat for Integral Development (SEDI), three non-profits – Pan-American
Development Foundation (PADF), the Trust of the Americas, and the Young
Americas Business Trust (YABT) – and the sector-specific CITEL and Inter-
American Committee on Ports.
In 2008 SEDI had a budget of US$ 47.1 million, nearly one-third of the
OAS’s total budget.7 An umbrella secretariat, SEDI houses the departments
of social development and employment, sustainable development, science
and technology, education and culture, human development, and trade and
tourism. Among SEDI’s key missions is to promote multi-sector dialogue
and PPPs, and the secretariat is charged with maintaining relationships with
organizations of the private sector and civil society that work on integral
development. To varying degrees, SEDI’s component departments engage
private firms in their programmes and projects. To cite a few examples: the
Department of Science and Technology partners global high-tech firms in
the Engineering for the Americas education programmes; the Department
of Social Development and Employment includes the regional employer
organization, CEATAL, in forums on labour and employment issues; and the
Department of Sustainable Development has held dialogues with the private
sector on energy strategies; the Department of Trade and Tourism organizes
the OAS Private Sector Forums in the context of the General Assemblies and
Summits of the Americas.
However, the general orientation of most SEDI programmes is towards
member government agencies and other multilateral institutions, with a lesser
focus on the private sector. In conversations with the staff of SEDI depart-
ments, there was a clear awareness of the challenges inherent in a public
sector development agency seeking to engage the private sector with its for-
profit paradigm. Nevertheless, among SEDI staff there was also a widespread
interest in more coherent and enhanced engagement with the private sector
and confidence that there exist many opportunities for mutual benefit.
In 2003, the OAS/SEDI signed a pioneering cooperation agreement with
Forum Empresa, a non-profit association of some 19 national organiza-
tions in the Western Hemisphere dedicated to promoting corporate social
responsibility among its private sector membership. Through this partner-
ship, the OAS/SEDI, in conjunction with the Multilateral Investment Fund
(MIF) of the Inter-American Development Bank (IDB), contributed with
Forum Empresa in a joint project for the promotion of CSR within small and
medium-sized enterprises (SMEs) in Latin America. Through this partnership,
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252 What Role for the Private Sector?
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Richard E. Feinberg 253
• Across its various programmes, OAS engagement with the private sector
would benefit from coordinating, synergistic structures, the imposition
of some common disciplines and guidelines, and the systemic sharing
of information and plans. From the viewpoint of the private sector, such
institutional discipline would facilitate engagement. Private firms would
see a more purposeful, focused inter-American system, easier to navigate
and more partner-friendly. There would be more added value with less
administrative strain.
• As a concept that has gained increasing currency in the Western
Hemisphere and has been incorporated into a number of valuable OAS
programmes, corporate social responsibility (CSR) could be given greater
visibility and centrality in a variety of OAS development programmes.
By building on existing programmes, the OAS could further strengthen
its relations with the many national CSR associations in member states,
thereby facilitating the attraction of private firms to OAS programmes.
• In addition to including private firms on programme advisory boards, as
is already the case, the OAS should consider the creation of an institution-
wide private sector advisory board or commission (more on this later).
• The Hemisphere could both learn from and contribute to comparative PPPs
in other regions, both South and North (see Utting and Marques, 2009).
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254 What Role for the Private Sector?
Interviews with leaders from the private sector and from other multilateral
institutions, and the experiences of other multilateral entities, suggest the value
of institutional mechanisms that provide for two-way channels of communi-
cation between the OAS, and specifically the office of the Secretary General,
and the business sector. For the OAS, such mechanisms would promise regular
business input while channelling private sector support for the institution’s
own priorities and programmes. There are several possible mechanisms for
private sector engagement with the OAS. The weightiest is the APEC model.
The least complex is an informal advisory board. An intermediary option is the
formation of a standing, representative, private sector committee.
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Richard E. Feinberg 255
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256 What Role for the Private Sector?
The Organization of American States and the private sector are not a natural
fit. The OAS is primarily a political body responsive to ministries of foreign
affairs and is struggling under severe budget constraints. Nevertheless, over
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Richard E. Feinberg 257
the years the OAS has built a number of innovative programmes that engage
the private sector, including PPPs. More recently, the OAS has added the
Private Sector Forum as an instrument to engage the private sector in its
development dialogue.
The Summit of the Americas and its follow-up mechanisms offer power-
ful instruments for elevating OAS engagement with the private sector to
much higher levels. The Port of Spain Summit declaration contains many
proposed initiatives congruent both with OAS objectives and private sector
interests; it is important for the OAS to take charge and to partner other
institutions in implementing important portions of that economic agenda.
In 1959, the OAS gave birth to the Inter-American Development Bank,
and it is time that the two Washington, DC-based agencies become strategic
partners, forging a genuine political economy paradigm for development.
Together, the OAS and IDB can make the encouragement of PPPs a common
focus, assisting members to create enabling frameworks that promote both
infrastructure and social-oriented partnerships. Together, the two pillars of the
inter-American system can gather the expertise, resources and leverage neces-
sary to provide the value that will attract the interests of the private sector.
To optimize its capacity to engage the private sector and to leverage the
profile and mandates of summitry, the OAS should strengthen its internal
organization, take full advantage of the maturing Private Sector Forum, and
build a new mechanism to formalize a permanent dialogue with private
sector leaders.
Taken together, these recommendations can help to more effectively
engage the private sector in the inter-American dialogue and agenda for sus-
tainable development and in the implementation of summit mandates. The
2009 Summit of the Americas and follow-up activities can serve to launch
specific initiatives and new mechanisms for the forging of PPPs, while
strengthening the core institutions of the inter-American system and their
relations with the Hemisphere’s private sector and each other.
The progress noted in engaging the private sector has occurred despite
the long-standing ambivalence in many foreign ministries and some
governments regarding the political legitimacy and representativeness of
their national private sectors. Some foreign ministries see themselves as
more reflective of a national interest than self-interested and more narrowly
focused private firms. Some governments question whether the private sector
should play more than a subordinate role in national economic life. These
conflicts, deeply rooted in Latin American institutions and society, have
taken on greater force with the re-emergence of nationalistic populism in
some countries. Without doubt, these ideological cleavages make consensus
more difficult to achieve; the refusal of some countries to ratify the official
Summit communiqué in Trinidad and Tobago signalled these deep fractures.
Nevertheless, engagement by the inter-American system with the private
sector has occurred and will continue. Most countries are pursuing an
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258 What Role for the Private Sector?
Notes
This chapter draws on a report prepared for the Organization of American States
(OAS), Department of Trade and Tourism, ‘Private Sector Participation in the Inter-
American System and in the Summits of the Americas: Strengthening Dialogues,
Catalyzing Actions’, March, 2009.
1. Indeed, the OAS’s own Board of External Auditors has issued this warning: ‘The
Board feels that this is a very critical time for the future of OAS. If the Member
States do not begin to take this looming budgetary crisis seriously, within a few
years, OAS will no longer be able to continue, without dramatic cutbacks in
programs and activities’ (OAS, 2007, p. 16).
2. The membership of the Joint Summit Working Group includes, in addition to
the OAS: Inter-American Development Bank (IDB), UN Economic Commission
on Latin America and the Caribbean (UN ECLAC), Pan-American Health
Organization (PAHO), Inter-American Institute for Cooperation on Agriculture
Shaw
Richard E. Feinberg 259
References
Bloomgarden, David and Asako Maruyama (2008) Infrastructure and Public–Private
Partnerships in Latin America and the Caribbean, MIF Retrospectives, September.
Feinberg, Richard (2009a) ‘The Eclipse of the Americas’, ForeignAffairs.com, 5 May.
Available at, http://www.foreignaffairs.com/articles/65081/richard-feinberg/the-
eclipse-of-the-americas.
Feinberg, Richard (2009b) ‘Promoting Private Sector-Led Prosperity’, Summary of the
Private Sector Forum Panel Discussions and Keynote Addresses, Hemispheric Private
Sector Forum, Port of Spain, Trinidad and Tobago, 15–16 April. Available on www.
oas.org.
Feinberg, Richard (2009c) ‘Private Sector Participation in Inter-American Summitry:
From Inputs to Outputs’, paper submitted to FOCAL/Inter-American Dialogue
Workshop, Washington, DC.
Feinberg, Richard (2006) ‘Presidential Mandates and Ministerial Institutions: Summitry
of the Americas, the OAS and the IDB’, Review of International Organizations, Vol. 1,
pp. 69–94.
Feinberg, Richard (2000) ‘Comparing Regional Integration in Non-Identical Twins:
APEC and the FTAA’, Integration and Trade, Vol. 4, No. 10, pp. 3–30.
Heine, Jorge (2006) ‘On the Manner of Practising the New Diplomacy’, CIGI Working
Paper, No. 11, October. Available at http://www.cigionline.org/publications/2006/10/
manner-practising-new-diplomacy.
Katz, Julius and Robert Fisher (1995) ‘Agenda for the Americas’, reprinted in Robin
Rosenberg and Steve Stein (eds), Advancing the Miami Process: Civil Society and the
Summit of the Americas. Miami: North-South Center Press, 1995. Paper commis-
sioned by the Association of American Chambers of Commerce in Latin America,
the Chamber of Commerce of the USA, and the Council of the Americas.
Leadership Council for Inter-American Summitry (1999) Mastering Summitry: An
Evaluation of the Santiago Summit of the Americas and its Aftermath. Coral Gables:
North-South Center Press.
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260 What Role for the Private Sector?
Shaw
14
Conclusion: The Fragile Legitimacy
of Inter-American Institutions
Gordon Mace and Jean-Philippe Thérien
A mixed record
Shaw
262 Conclusion
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Gordon Mace and Jean-Philippe Thérien 263
seen if the Energy and Climate Ministerial of the Americas, which met
in Washington, DC, in April 2010, can start implementing some of the
measures included in the Energy and Climate Partnership of the Americas
proposed by the Obama administration at the Trinidad and Tobago Summit
a year earlier.
With regard to poverty reduction, Nicola Phillips writes that even though
official figures indicate a decline in the overall trend since 1990, and most
particularly since 2002, the aggregate figures are somewhat misleading. The
trend is overly influenced by the performance of a few countries (notably
Brazil, Chile, Mexico, and Ecuador), and masks a ‘persistence or worsening
of poverty levels for large parts of the poor population’ of the region. By no
means is the IDB solely responsible for the sad situation, but it does bear
some responsibility in relation to the strategy used. The IDB strategy has
been framed too much in national terms without giving enough consider-
ation to the ‘vertical’ dimensions of poverty, which refer to the mode of
inclusion in the global production processes and the structural connections
between poverty and inequality. This situation will be complicated by the
increasing phenomena of migrations and diasporas with their mix of positive
and negative effects on national and regional policies.
If the record of inter-American institutions is a mixed one then, did it
fare better or worse than that of the institutions at the sub-regional level?
Answers to this question are provided in the third part of the volume and
reveal that the performance of sub-regional institutions was also lower than
what was expected initially. In their respective chapters on Mercosur and
NAFTA, Marc Schelhase, and Louis Bélanger and Richard Ouellet argue that
these trade agreements initially performed well but had difficulty afterwards.
In both cases, the integration process generated economic benefits as trilateral
merchandise trade tripled in the case of NAFTA, reaching US$ 946.1 billion
in 2008, while growth in intra-regional trade and FDI was substantial in the
Mercosur for most of the 1990s. The negative side concerns the functioning
of regional institutions and, in the case of Mercosur, the negative impact of
global economic conditions resulting from the Mexican Peso crisis of 1994,
and the crises in Asia and Russia in 1997–8, followed by that of Argentina in
2001–2. Since the second half of the 1990s, Mercosur has been handicapped
by problems of coordination and enforcement. The attempts to deepen
and widen the integration process have created a congestion that reveals
the inability of member states to develop Mercosur according to a clear
blueprint. As for NAFTA, the main problem is that of an institutional deficit
whereby the governing bodies lack the ‘rule-making capability needed to
effectively tackle twenty-first century trade issues’. Up to now, the member
states have only agreed to improve NAFTA by ‘à la carte agreements’. The
danger therein is to bring about a gradual obsolescence of NAFTA.
ALBA, for its part, is quite a different institution as demonstrated in the
chapter written by Josette Altmann. More a multidimensional integration
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264 Conclusion
A question of legitimacy
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Gordon Mace and Jean-Philippe Thérien 265
Input-oriented legitimacy
The input aspect of legitimacy refers to inclusiveness and diversity of
representation which both relate to the availability of channels for voice
opportunity and to the actors that can access these channels with the
possibility of influencing regional decision making.
Up to now, two categories of actors have been successful at using regional
fora in order to shape the agenda of hemispheric regionalism: national
governments and the private sector. Governments are the prime movers of
the integration process while the private sector is seen as a legitimate actor
because of its importance for economic growth.
States are formally equal in international law but they differ in terms of
their relative weight, in addition to having different views of the world. With
regard to hemispheric regionalism, the US is traditionally the main force
supporting the integration process. It is only the hegemonic position of the
US in the Americas that enabled inter-American institutions to exist over
the years. In 1994, as with other initial phases of institution building at the
hemispheric level, the US administration was able to build a consensus with
other governments in the region in favour of a renewal of the inter-American
system. In 2003, however, the consensus was broken as many South
American governments became critical of US policies regarding regional and
world affairs. Diverging views were expressed not only by governments of
the ALBA coalition but also by Brazil and its Mercosur partners. This opposi-
tion of values and policy objectives on the part of member states now creates
an important legitimacy problem for inter-American institutions that are
again accused by some ALBA governments of promoting a US agenda that is
detrimental to the interests of other countries of the region.
The private sector was also very much involved in the consultations
around the negotiations for the establishment of a Free Trade Area of the
Americas (FTAA) and in preparatory meetings concerning the drafting of
summits’ declarations and of plans of action. Private sector participation in
the building of a hemispheric agenda is accepted because of the particular
expertise of business organizations and because firms make investments,
create jobs, and are the main architects of international trade. This is why
the OAS developed the Private Sector of the Americas Initiative to help
organize the Private Sector Forum, which holds pre-summit meetings before
every Summit of the Americas. The private sector was also able to provide
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266 Conclusion
inputs for the negotiations toward an FTAA through the Business Forum,
which was convened before every meeting of the trade ministerials. But
firms and business organizations are not the only representatives of societal
interests.
What about the capacity of other actors to influence the decision-making
process of hemispheric institutions? One category of actors, which is notable
by its absence inside inter-American institutions, is that of parliamentarians. In
a context of representative democracy, legislators have as much legitimacy as
government officials to represent the interests of national societies. However,
they have been kept at the margins of inter-American fora except for a small
incursion on the part of the COPA (Confederation of Parliamentarians of
the Americas). The COPA was established in 1994 and is composed of 400
parliamentarians pertaining to 28 countries of the Americas. The grouping
made some recommendations regarding summits’ mandates, but it clearly
hopes to play a larger role in the functioning of hemispheric regionalism.
This is also the case for trade unions, which have not been given a special
status inside hemispheric institutions as is the case for most sub-regional
integration processes (Milet and Sanhueza, 2002, p. 22). This is somewhat
surprising because trade unions are regularly consulted by governments in
national contexts and because they are generally more organized, with better
resources, for action at the transnational level.
The other category of actors is that of civil society organizations (CSO).
Even though CSOs are accused sometimes of representing narrow interests,
it is true that collectively they express the views of a large segment of the
population. The literature on civil society participation at the hemispheric
level is abundant (Grugel, 2006; Icaza, Newell and Saguier, 2009; Milet and
Sanhueza, 2002; Smith, 2008; Smith and Korzeniewicz, 2007; Tussie and
Botto, 2003) and relatively unanimous in its assessment of the influence of
CSOs on decisions taken at the regional level. Its two major conclusions are
that regional institutions did make an effort to open up the decision-making
process, but that the results fall well below expectations.
The impetus for establishing channels to facilitate civil society participation
came from the governments of Canada, Chile, and the US. As a result of the
pressure exerted by these governments, two mechanisms were established con-
cerning the participation of CSOs. One was the Committee of Government
Representatives on the Participation of Civil Society (CGR), which was the
only channel that CSOs could use to express their preferences with regard
to the negotiations concerning the establishment of the FTAA. The CGR
was created in March 1998 and held 24 meetings from 1998 to 2004. The
other is the Committee on Inter-American Summits Management and
Civil Society Participation in OAS Activities. An outgrowth of the former
Committee on Inter-American Summits Management and of the Committee
on Civil Society Participation, it is responsible for facilitating civil society
participation at the OAS, during and between general assemblies, and prior
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Gordon Mace and Jean-Philippe Thérien 267
to summits and ministerial meetings. Finally, the OAS, through its Unit for
Sustainable Development, devised in 1999 the Inter-American Strategy for
Public Participation in Sustainable Development Decision-making (ISP) as
a follow-up to the Santa Cruz Declaration of 1996 on sustainable develop-
ment (Mace and Loiseau, 2005, p. 128).
Despite these efforts by regional institutions, CSOs rapidly became dis-
illusioned with the space offered to them for expressing their preferences.
This is especially true with regard to trade negotiations (Tussie and Botto,
2003, p. 37; Icaza, Newell and Saguier, 2009, p. 6; Shamsie, 2000, pp. 14–15),
where CSOs came to see the mechanisms of consultation as merely ‘invited
spaces’ and ‘drop-boxes’ whose only purpose was to get social support to
legitimate the negotiation process (Saguier as cited in Icaza, Newell and
Saguier, 2009, p. 6).
As to the other channels for consultation, they were also seriously flawed
from the point of view of CSOs. Even though the OAS still officially recog-
nized 171 organizations in 2006, these mechanisms remain handicapped by
problems related to both participation and influence. Participation is made
difficult by the fact that convocations are often sent late, generally by email,
and sometimes only one week in advance, with CSOs having to fund their
travel costs. This results naturally in unequal representation among CSOs
and among countries.
Influence is also extremely limited (Grugel, 2006, p. 209; Smith and
Korzeniewicz, 2007, p. 158) as the rules for participation determine that
positions are expressed verbally (generally lasting two to three minutes) or
through documents submitted to the appropriate secretariat. Direct partici-
pation to these gatherings and to encounters with ministers for foreign
affairs reveal the limited consideration given by most governments to
CSOs’ inputs.
This state of affairs fuels a perception on the part of a vast majority of
CSOs that there is unequal access to decision making. There is a clear sense
on the part of CSOs and in academic circles that the present phase of hemi-
spheric regionalism, which started in 1994, is essentially characterized by
corporate governance with executive branches of governments and business
organizations as main actors. It is felt that the voices of other categories of
actors are not heard and, consequently, that their preferences and the inter-
ests they represent are not really taken into consideration.
On this basis, input-oriented legitimacy of hemispheric institutions can
be categorized as relatively low in the present context.
Output-oriented legitimacy
Output-oriented legitimacy refers to the effectiveness and accountability
of an institution. With respect to effectiveness, two aspects can be distin-
guished: the clarity of an institution’s objectives and the implementation of
these objectives.
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268 Conclusion
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Gordon Mace and Jean-Philippe Thérien 269
Given the analyses offered in this volume, in what ways can the perform-
ance of hemispheric regionalism be improved? Is there a role to be played by
specific groups of actors and what innovative strategies could be envisaged
in the present, difficult, context of inter-American relations?
With regard to actors, Norman Girvan’s chapter reminds us that initial
expectations concerning the positive effect on hemispheric cooperation of
the arrival of the Caribbean Commonwealth countries in the OAS in 1990,
along with Canada, were somewhat exaggerated. Small states have limited
resources at their disposal to influence international negotiations, particu-
larly when – as in the case of the Caribbean – they are negatively affected by
‘structural shifts’ in the global geo-economic and geo-political environment.
The recent financial crisis increased the fragility of the small Caribbean states
and reduced their capacity to shape the course of events in the Americas.
Shaw
270 Conclusion
The situation is different for middle powers, as Jorge Heine argues in his
chapter, because the changing landscape in the Americas offers a unique
moment for hemispheric cooperation. It provides a window of opportunity
to rethink and reorganize the inter-American agenda. Middle States – such
as Argentina, Canada, Mexico, and Chile – possess the resources and the for-
eign policy tools to conduct a diplomatic effort that could lead to renewed
inter-American cooperation. Acting as a cohesive unit, middle-power diplo-
macy could ‘help to bridge the concerns and interests of the region’s North
and South’ and, in so doing, could give a new breath of life to the inter-
American agenda.
The private sector is also an actor that could play a very positive role in
hemispheric cooperation, according to Richard Feinberg. Since 1994, and
particularly but not only in the context of the FTAA negotiations, business
representatives have been actively involved in hemispheric affairs as men-
tioned earlier. Through mechanisms such as the Business Forum and the
Private Sector Forum, the private sector has been part of regular consultations
concerning hemispheric affairs. Yet as Feinberg suggests, much more could
be done. In particular, an increase in public–private partnerships could provide
a unique boost to inter-American cooperation.
There is certainly a place for input by various kinds of actors inside inter-
American cooperation but there is also a pressing need for new strategies,
new attitudes, and different ways of doing things. Suggestions have already
been made concerning the OAS specifically and summitry more generally.
The OAS needs more resources but must also rethink its priority-setting
process (Meacham, 2010). And more than anything else, it must remain
an effective defender of regional democracy because, when all is said and
done, the organization will be judged by ‘its ability to act effectively in line
with its doctrinal commitment to the defense of democracy’ (Meacham,
2010, pp. 15–16). Summitry, for its part, is the object of profound scepti-
cism even though it does have useful functions in terms of moving the
hemispheric agenda, setting priorities, and facilitating dialogue between
leaders (Feinberg, 2010, pp. 2–3). But it must work to eliminate its short-
comings with, among other things, a more workable agenda, stronger
monitoring of implementation, more efficient use of resources, better coor-
dination among regional agencies, and stronger participation from external
actors (ibid., pp. 6–9).
These are the nuts and bolts of cooperation, but there are also some funda-
mental issues to address if hemispheric cooperation is to have a chance to
survive. Profound changes will need to be made in two directions at least.
The first concerns states’ attitudes and positioning. As the dominant state of
the region, it is natural for Washington to be the main mover of hemispheric
regionalism just as it is natural for Brazil to be the main force behind South
American integration. However, Washington would profit immensely by
learning from Brazilian foreign policy in a context of regionalism, particularly
Shaw
Gordon Mace and Jean-Philippe Thérien 271
Shaw
272 Conclusion
and corruption would certainly figure at the top of the list in the present
context. That is a problem which cannot be dealt with successfully at the
national level only because it now forms a grid involving all the countries
of the region. The same could be said for energy, environmental security,
terrorism, food security, regulatory frameworks for economic relations, and
so on. Effectiveness would therefore be increased considerably if govern-
ments and hemispheric institutions focused on fewer issues and adopted
more articulated strategies to deal with these issues. Naturally, effectiveness
will be improved if adequate resources are available. Although governments
always want to make sure that funds are used in an effective manner, they
need to understand that the credibility of engagements rests in good part on
the financial support that regional institutions receive to implement their
mandates.
Conclusion
Shaw
Gordon Mace and Jean-Philippe Thérien 273
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Shaw
274 Conclusion
Shaw
Index
Acharya, Amitav & Alastair Iain Bush Administration 2, 8, 43, 44, 45,
Johnston 9, 17 46, 48, 49, 53, 55, 81, 108, 132,
ALBA see Bolivarian Alternative for the 133, 138, 195, 198, 225, 237
Americas see also Clinton Administration, FTAA,
Americas viii, 1, 4, 6, 7, 9, 12, 13, 16, NAFTA, Obama Administration, US
23, 25, 81, 82–84, 95–108, 111, 120,
124–127, 229–239, 261, 264 CACM ix, x, 5, 9, 24, 31, 84, 85–96,
see also US 87, 200, 228
Andean Community of Nations (ANC/ see also Central America
CAN) x, 5, 28, 31, 34, 96–98, 107, CAFTA-DR 30, 31, 249
181, 182, 205, 208, 209, 228 Canada x, 7, 9, 11, 38, 43, 44, 46, 63,
Andean Pact ix, 24 72, 91, 96, 102–104, 108, 187–200,
Argentina 3, 16, 17, 33, 34, 46, 53, 226, 229–230, 234, 238, 269
101–102, 132, 171–183, 231–232, 263 as a middle power 229–230
see also Mercosur see also NAFTA, OAS
Asia 62 Caribbean 3, 5, 9, 11, 12, 43, 60–73,
see also financial crisis 206–207, 214, 215–220, 269, 272
Association of Caribbean States (ACS) see also ACS, CARICOM, Petrocaribe
68, 71–72, 204, 205 CARICOM ix, x, 5, 13, 14, 61, 62, 63,
see also Caribbean, CARICOM 65, 66, 68–71, 72, 85–86, 98–99,
asymmetries xi, 2, 4, 217 200, 205, 209, 228
A10 226, 237–239 see also ACS, Caribbean
Castro, Fidel 44, 52, 53, 206
BASIC (Brazil-South Africa-India-China) see also Cuba
3 Castro, Raul 52, 53
see also BRICs, climate change see also Cuba
Bolivarian Alternative for the Americas Central America 3, 4, 6, 11, 30, 38,
(Alternative Bolivariana para America 99–101, 132, 139, 205, 214,
Latina) (ALBA) ix, 16, 25, 35–36, 215–220
38, 50, 65, 67, 71, 120, 123, 204–220, SICA 99–101, 205
226, 228, 263–264, 265 Chavez, President Hugo 16, 29, 31, 35,
ALBA Bank 211, 214, 234 36, 37, 38, 39, 44, 48, 49, 50, 51,
see also Hugo Chavez, UNASUR, 53, 54, 55, 98, 108, 118, 122, 159,
Venezuela 182, 204–220, 226, 264
Brazil x, 3, 4, 11–12, 13, 16, 29, 31–33, see also ALBA, Venezuela
38–39, 40, 43, 44, 46, 47, 49, 50, 51, Chile 4, 17, 81, 188, 209, 226, 228,
53, 56, 66, 96, 101–102, 104–106, 230, 232–234, 238
108, 171–183, 226, 227, 231–232, as a middle power 232–234
234, 262, 265, 270 China 4, 13, 25, 38, 48, 63, 218, 227,
Amazon 105–106 233
see also BRICs, climate change, Lula da see also BRICs
Silva civil society 11, 37, 248, 266
BRICs 2, 3, 4, 40, 47, 62, 228, 234 civil society organizations (CSOs)
see also Brazil, Russia, India, China 266–267, 269
275
Shaw
276 Index
climate change 3, 60, 68, 95, 96, EPA (with the EU) 69–71
104–106 see also EU
see also BASIC EU 7, 23, 63, 69, 72, 84, 171, 181, 182,
Clinton Administration 5, 45, 133, 209, 292
188, 237
see also Bush Administration, Obama financial crisis 2, 4, 23, 60–65, 81,
Administration, US 272
Clinton, Hilary 48, 54, 68, 225, 229 financial services 189, 193
Cold War 25, 113, 131, 132 foreign direct investment (FDI) 63,
Columbia 11, 38, 46, 50–51, 66, 142, 172, 180, 233
182 formal regionalization 1, 205
Columbian Plan 138–139 see also new regionalism
see also crime, drugs Free Trade Agreements (FTAs) 8, 29, 45,
corporate social responsibility (CSR) 51, 81, 89, 91, 92, 171, 174, 181,
11, 253 182, 187, 193, 229, 230, 233
coup 52, 114, 121, 227, 261 see also Mercosur, NAFTA
see also Honduras, Jose Zelaya Free Trade Area of the Americas (FTAA)
crime 31, 52, 132, 133, 137–141, 142, 1, 12, 13–14, 16, 17, 25–30, 31–34,
229, 235, 262, 271 37, 50, 53, 64, 65, 71, 81, 82, 88,
see also drugs 89, 173, 180, 204, 207, 208, 235,
Cuba 8, 25, 35, 44, 45, 46, 52, 53, 54, 249, 262, 270
55, 56, 66, 72, 95, 111, 120–121,
123, 127, 204, 206, 209, 215, 218, GATT 26, 88
225, 226, 235 see also WTO
see also ALBA, Fidel Castro, Raul globalization 1, 6, 27, 47, 218
Castro G7/G8 12, 238
G20 2, 3, 12, 40, 46, 228, 236
debt 7, 67, 82, 87
see also financial crisis Haiti 3, 52, 136, 141–142, 230
democracy x, xi, 7, 12, 14, 15, 17, 49, Honduras 50, 52, 66, 111, 117, 121–122,
64, 111–128, 131, 140, 261, 270 123, 126, 127, 144, 216–217, 225,
Democratic Party (US) 43, 51 230, 235
see also Bush Administration, see also coup, Jose Zelaya
Clinton Administration, Obama human development 11, 153
Administration, Republican Party human rights x, xi, 5, 7, 8, 14, 114
diaspora 11, 43 see also OAS
drugs 10, 12, 46, 47, 138–141, 235 human security 11, 135, 153,
see also crime Huntington, Samuel 23, 88
ECLAC 5, 60, 61, 155, 162, 163, 164, IBSA (India- Brazil- South Africa) 3,
249 228
see also UN see also BRICs
electricity 96–98, 99–101 India 3, 4, 227
energy 95–110, 189, 213, 231, 242, see also BRICs
262 indigenous communities 64, 156
clean development 105–106 inequality 137, 163, 164
clean energy 105–106 see also poverty
Energy & Climate Partnership of the institutionalization 1, 9–11, 12, 261,
Americas 95–106 263, 269
see also electricity, natural gas, Petrocaribe see also new regionalism
Shaw
Index 277
Shaw
278 Index
Shaw