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Leaders of the nations of the Western Hemisphere are working to manage regional democratization, problems associated with the challenges of globalization, and new and longstanding security threats. Political and economic shocks—Argentina’s financial crisis, Venezuela’s polarization, Haiti’s unrest, upheaval in the Andean region—have shaken democratic consolidation, tested democratic institutions, and weakened public faith in both democracy and liberalizing economic reforms. The United States and Canada continue to try to resolve trade disputes and to repair relations damaged by the war in Iraq. Mexico has largely recovered from its 1994 financial crisis, but crime and official corruption remain obstacles to further political and economic development.
LATIN AMERICA
All the nations of the western hemisphere, except Cuba, are now democracies. Yet political upheaval remains a threat in several Latin countries. In Venezuela, the source of some 14 percent of U.S. oil imports, President Hugo Chavez survived an August 2004 referendum on his presidency, but the vote further polarized the electorate. His controversial land-reform program has increased animosity among domestic elites, and his bid to deepen ties with Cuba raised anxiety among the international community.
In Colombia, the government is conducting an ongoing battle against well-armed drug gangs, long-entrenched leftist guerrillas, and right-wing paramilitary groups. The government’s peace offers to the United Self-Defense Forces of Colombia (AUC) remain controversial, particularly a new law that gives amnesty, much-reduced prison sentences, and the chance to avoid extradition to the United States to demobilized AUC members who have committed war crimes or participated in the drug trade. Under Plan Colombia, about 400 U.S. military advisers and Special Forces troops and an equal number of civilian contractors provide technical support and counter-narcotics training for Colombian troops. The program expires in 2005, but President Bush and the U.S. Congress propose to renew it and, in the process, double the U.S. troop deployment to 800 and increase the number of civilian contractors to 600. Washington has spent $3 billion on Plan Colombia since 2000. According to 2004 United Nations’ figures, the most recent available, land used for coca production in Colombia was down to 80,000 hectares from a peak of 163,300 hectares in 2000. In 2004, almost 150 tons of cocaine were seized in Colombia, up more than 30 percent over 2003, and 1,900 cocaine labs were destroyed, a 40 percent increase from 2002. Analysts warn, however, that Plan Colombia may be pushing coca producers to shift operations to Bolivia and Peru. The United Nations measured a 17 percent increase in coca production in Bolivia and a 14 percent increase in Peru, resulting in an overall 3 percent increase throughout the Andean region in 2004.
Elsewhere in the region, indigenous populations in Ecuador, Bolivia, Peru, and Guatemala are restive. They remain markedly under-represented in democratic institutions, and their public demonstrations and other efforts to press for a larger political role have thrown the Andean democracies into turmoil. The presidents of Bolivia and Ecuador both resigned in the spring of 2005. In the region’s large cities, where the majority of Latin America’s population now lives, poverty, crime, drugs, and unemployment plague many neighborhoods. Drug trafficking and the money it produces continue to corrupt police forces and judiciaries in many countries. The majority of Latin Americans still live in poverty and inequality has worsened in the last 15 years.
The Organization of American States (OAS) remains the primary international organization of the Western Hemisphere devoted to political cooperation, though its ability to enforce its charter is limited. A contentious election in April 2005 for a new president pitted the United States against most of South America. The election of Chile’s former interior and foreign minister, Jose Miguel Insulza, marked the first time in OAS history that a U.S.-backed candidate failed to win the post.
CENTRAL AMERICA/CARIBBEAN
Central America, like Haiti, is increasingly a transit point for Colombian drugs. The influx of drug money has intensified governments’ struggles with rising crime rates and gangs, and heightened concerns about official corruption. Costa Rica announced bribery charges against two former presidents in 2004, including Miguel Angel Rodriguez, who in 2004 briefly served as secretary general of the OAS. The current president, Abel Pacheco, is also under investigation. All have denied wrongdoing. The investigations will test the justice system in a country that is often considered the most stable of the Central American democracies.
U.S.-Cuba tensions continue across the Florida Strait. U.S. public opinion on the continuing isolation of Cuba is increasingly divided. Stricter limits on U.S. remittances and travel to the island, imposed by the Bush administration in June 2004, angered some Cuban-Americans. Although second and third generations of political and technical leaders now run the country under President Castro’s watch, Cuba shows no signs of preparing for a political transition, and some modest economic reforms of the 1990s have been rolled back. In the meantime, Spanish and Canadian energy firms have found promising oil deposits in Cuban territorial waters. While the amount discovered so far is not sufficient for Cuba to become a net exporter of oil, reduced dependence on petroleum from Venezuela, Cuba’s main energy supplier, would diminish Cuba’s need for foreign currency and, perhaps, allow Castro to further insulate his country against U.S. and European influence.
Haiti, a country awash in arms, continues to face a severe crisis. In February 2004, the United Nations dispatched a multinational stabilization force to the island, where international troops and the interim national government struggle to contain organized street violence. Some attribute the unrest to supporters of ousted president Jean Bertrand Aristide; others blame violent paramilitary groups and police. Amid the ongoing political turmoil, the desperately poor island nation was devastated by hurricanes in the fall of 2004 that killed more than 1,600 and submerged entire cities and towns in the north of the country. A U.N. peacekeeping force has failed to disarm violent groups in the country. Political assassinations, common crime, and the absence of international support to shore up the island nation’s brittle institutions have accelerated Haiti’s emergence as the region’s failing and near-failed state.
MEXICO
Mexico has made a remarkable democratic transition from authoritarian rule, despite corruption scandals, intra-party instability, and rising crime. However, electoral turmoil is on the rise. The Institutional Revolutionary Party (PRI), whose decades-long hold on presidential power was broken in 2000, is making a comeback. The presidential election scheduled for mid-2006 has awakened authoritarian tendencies in the ruling National Action Party (PAN) and the opposition PRI, both of which tried to prevent the popular mayor of Mexico City from contesting the presidency. The Mexican economy has finally recovered from the 1994 financial crisis. The stock market did not regain its 1994 value in dollar terms until early 2004, but then it grew by 47 percent that year. Since the North American Free Trade Agreement (NAFTA) took effect in 1994, Mexico has attracted an average of some $14 billion a year in U.S. foreign direct investment (FDI), more than three times the annual FDI received in the six years prior to NAFTA . Still, Mexico’s gross domestic product grew by a less-than-expected 4 percent in 2004. It remains Latin America’s largest economy, though it may soon be overtaken by Brazil. Mexico has already fallen behind China as an exporter to the United States. And crime and corruption are widespread. A June 2004 study by a Mexican think thank, the Center of Research for Development, found that 96 percent of crimes committed in Mexico between 1996 and 2003 went unpunished. This level of impunity is also characteristic of Colombia and many other Latin nations.
ECONOMICS
In South America, regional economic integration has provoked a reconsideration of hemispheric relationships, especially in larger nations like Brazil and Argentina. Both countries view the United States and its formidable economic, cultural, and political influence in the region with ambivalence. Both maintain a broad range of economic and political contacts outside the region. Brazil’s second largest trading partner, after the United States, is China. It has also developed extensive trade and investment links with the European Union. Brazil has also sought a political role beyond its neighborhood. In June 2004, it assumed control of the U.N. peacekeeping mission to Haiti and serves as a leader of the G-20, a group of finance ministers and central bank heads from the world’s 20 largest economies. It has also lobbied for a permanent seat on the U.N. Security Council. Corruption investigations into the ruling party, the Partido dos Trabalhadores, may at least temporarily slow the government’s aggressive international and domestic agenda.
Brazil has stabilized its economy despite fears that the country’s first left-wing president, Luiz Inacio Lula da Silva, would succumb to pressure from his supporters and violate debt-repayment agreements with the International Monetary Fund (IMF). The Brazilian president, elected in October 2002, has resisted that pressure, and his fiscal and monetary choices have inspired confidence in Brazil’s creditworthiness among international investors.Argentina’s recovery from the economic and political crises of 2001 continues. Its default on its international debt brought down a series of Argentine presidents. But President Nestor Kirchner in 2005 became a champion for Latin Americans disillusioned with the IMF when he successfully renegotiated Argentina’s debt without the fund’s involvement. The economy is forecast to grow by as much as 7 percent in 2005, and unemployment is falling. In 2004, Chile updated its constitution, further fortifying its democratic institutions by removing a provision—left over from the years of dictatorship—that set aside nine non-elected Senate seats, including four for former military and police officers, and a life seat for former dictator General Augusto Pinochet. Despite advances in the consolidation of democracy, income distribution in Chile is among the most unequal in South America and getting worse.
The Central American Free Trade Agreement (CAFTA), the pact U.S. officials negotiated in the spring of 2004 with the Central American countries and the Dominican Republic, was under U.S. congressional consideration in mid-2005. Trade negotiations with the Andean countries are still in progress, and the Bush administration may consider negotiations with MERCOSUR, a common market founded by Brazil, Argentina, Paraguay, and Uruguay. U.S. officials had hoped to create a Free Trade Area of the Americas (FTAA) by 2005; that deadline was not met and prospects for FTAA are dim. MERCOSUR and individual Latin American countries, such as Mexico and Chile, are pursuing trade agreements with the European Union and Asian countries, particularly China. China’s investments and trade with the region have exploded in the past two years.
CANADA
Canadian opposition to the Iraq war cooled U.S.-Canadian relations. Ottawa’s February 2005 decision to opt out of participation with the United States in a North American missile defense shield strained them further. The bilateral trade relationship remains the world’s largest: Some $1.8 billion in trade cross their shared border very day.But Washington and Ottawa have also had to contend with a controversy over Canadian softwood lumber exports to the United States—a dispute so contentious, the World Trade Organization created a panel in February 2005 to decide if Ottawa can apply $4.25 billion in sanctions against Washington.
At a March 2005 North American summit meeting in Waco, Texas, President Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin stopped short of announcing major initiatives to enhance NAFTA. Instead, they created a task force to develop border security strategies, increase energy supply among the three countries, improve cooperation on intelligence, and reduce transportation bottlenecks at borders to ease the passage of cargo.
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