Virtual Meeting

Transition 2021 Series: The U.S. Approach to Latin America and the Caribbean

Monday, May 3, 2021
Henry Romero/REUTERS
Speakers

Fellow for Latin America Studies, Council on Foreign Relations; @pol_ange

Principal Economic Advisor, Integration and Trade Sector, Inter-American Development Bank

Professor of Practice, William J. Perry Center for Hemispheric Defense Studies, National Defense University; CFR Member

Presider

Host, Weekend Edition Sunday, NPR; CFR Member

Transition 2021 Series and Latin America Studies Program

Panelists discuss how the Biden administration will approach relations with Latin America and the Caribbean, including issues pertaining to trade, migration, climate, and challenges to democratic governance.

The Transition 2021 series examines the major foreign policy issues confronting the Biden administration.

GARCIA-NAVARRO: Welcome to today's Council on Foreign Relations meeting on “The U.S. Approach to Latin America and the Caribbean.” This meeting is part of the CFR Transition 2021 Series which examines the major issues confronting the Biden-Harris administration in the foreign policy arena. I am Lulu Garcia-Navarro, host of Weekend Edition Sunday and the podcast Up First and I'll be presiding over today's discussion. We have several hundred registered for this meeting. We will do our best to get as many questions from our members as we can in the second portion of this, but for now I would like to welcome our panelists. First of all, we have Paul Angelo, he is a fellow for Latin American studies at the Council on Foreign Relations, hello to you. Mauricio Mesquita Moreira, he is the principal economic advisor, integration and trade sector of the Inter-American Development Bank, welcome to you. And Celina Realuyo is professor of practice at the William J. Perry Center for Hemispheric Defense Studies, National Defense University and of course, a CFR member, welcome to you. Lots going on, lots to discuss, we're going to try and get through as much of it as we can. But I want to start with where we are now. Latin America has been hit hard by the crisis in this pandemic, it's one of the hardest hit regions actually in the world. The IMF has just said it will not recover to its pre-pandemic level this year in terms of its economy, poverty it says will increase. Latin America had the highest number of weeks, where schools were closed and there was a fear of increased political instability off the back of these many pressures. I mean, just look at the protests in Colombia over tax reform that we've seen over the past several days. So I'm going to go around the group and just give your assessment please of where you think things stand in the region as it embarks in this new relationship with a new American president. I'm going to start with you, Celina.

REALUYO: So what we're seeing is a multifaceted, actual crisis as a result of COVID, I can divide it into four categories. First is obviously the health and the impact on human capital, which has been much worse because of the inequities historically, in and more importantly, poor health care throughout the region of the Caribbean, as well as Latin America. The second piece, and Mauricio can speak to this with much more detail, is really the economic crisis. So we're looking at a health as well as an economic crisis that a few countries, especially in Latin America, were not really prepared for. The third piece is the impact on the security forces. As you know, Lulu, the military is very well regarded in Latin America and had already been overburdened by kind of their daily tasks and now they're the go to, in terms of helping with the response, whether that's distributed a PPE, and now the question of securing the supply chain for the vaccines. Then lastly, you alluded to it in terms of what's happening in Colombia, the...basically the assault on democracy and then this kind of political unrest that was brewing even prior to the pandemic, so these are the four categories that I see. It's going to be very challenging for these countries to come out of it, but more importantly, there's a window of opportunity with the new administration to look for how we address these challenges in a win-win kind of approach.

GARCIA-NAVARRO: And we'll get to that in a minute, but Mauricio since Celina threw it to you, I will too, same question your answer?

MOREIRA: Thank you, Lulu. Well, yeah, as Celina has said, it's a major crisis. We never had a such a big drop in GDP in Latin American history, it's a socio-economic crisis. It's, to a large extent, was sort of a foretold tragedy, we had a lot of discussions in the IDB meaning, what sort of policy governments should follow, right? Even before the pandemic took hold in the region the consensus was that we need to go for lock downs, it was the only way to flatten the curve because the region has a very weak health system, not enough to sustain a pandemic of this level of high levels of formality. But we all knew that, this kind of research wasn't exactly going to work completely, because, as I said, there's very high levels of informality, poor housing, people agglomerating houses and stuff like that. So we knew there would be something in between, this sort of a more mild lockdown and that's what we have seen in the region and this sort of stop and go. And of course, some of the governments in the region didn't help at all, this negation-ist strategy, trying to play down the gravity of the pandemic. And it was still, facing the consequences, especially in South America, we have this very hot spots in Brazil, Uruguay, and Argentina. So even in those countries where, you know, the lockdowns were more strict, Peru is a good example of that, we're still facing the same. And of course the data is accumulating, the situation is getting worse and the only way out of this thing is to try to follow the guidelines, try to keep social distance as much as possible, and try to vaccinate people. And that's where the region needs cooperation, it's [inaudible] to try to get out of this huge crisis.

GARCIA-NAVARRO: Alright, Paul, your thoughts?

ANGELO: Yeah, I would just echo what the other panelists have already said and what you said in your initial remarks, I mean, Latin America and the Caribbean in absolute terms represent the worst affected region by COVID-19 for almost every measure. Despite being a mere 8 percent of the world's population, Latin American and Caribbean is home to some 20 percent of the world's known COVID cases. And in the past couple of weeks, 35 percent of the global COVID deaths and that's not even accounting for systemic under-recording in the region's two biggest countries, which are obviously Brazil and Mexico. And so the pandemic has actually just sort of laid bare the deficiencies in governance that were already becoming evident to citizens in Latin America in the fall of 2019 when we saw popular frustration percolate as massive protests in any number of countries in the region. And those protests have been resumed as people recognize that their governments are incapable of, or in some cases even unwilling, to provide the social services that are needed in order to deal with this pandemic.

And I would just echo what Mauricio said that the determining success, both globally, but particularly in Latin America and dealing with the pandemic, is all relative, those countries that were standouts at the beginning for taking very seriously to pandemic and enforcing lockdowns did not really weather the storm in terms of deaths and cases, as one might have suspected. Likewise, countries that, for all intents and purposes appear to have weathered the storm quite well, during the first year of COVID. Like Uruguay and into a little bit lesser extent Chile, those are countries that have taken the right precautions have been among the most significant vaccinators in the world, but nonetheless are facing record surges in COVID contagion and deaths at the moment. And so, you know, I think all of that is to say is that Latin American and Caribbean will be dealing with COVID, not just the effects of COVID, with COVID and the pandemic far into 2023, if not into 2024, given the widespread unavailability of vaccines today.

GARCIA-NAVARRO: All right, well, the widespread unavailability of vaccines. There's been a big discussion about where the Biden administration could help with that. And I want to ask about, where you see the Biden administration positioning itself at the moment, with the understanding that there have been other forums on immigration and the administration, so we won't focus too much on that here. But the Biden administration has made its sort of first outreach to the region in Central America and Mexico because of the immigration crisis on the southern border so I do want to start there in terms of the bilateral relationships. Mauricio, so far what we've heard from this administration kind of echoes the previous one, in a certain sense, right? A lot of let's make it in America, a lot of you know, about American job creation, and outreach initially, only because of a U.S. based crisis. What are you seeing in this administration in terms of how it views its relationship to the region? And how it is planning to exert its influence and help what is an ongoing crisis?

MOREIRA: Well, it's a very good question, Lulu, and I think there's very high expectations that, particularly in the region, that the new administration would change course on trade or on cooperation, particularly because we spent the last fifty years believing in this thing. I mean, the U.S. has always told us, look, this is the way to grow and there's a huge consensus, particularly in the nineties, that that was the way that the region could go and, you know, overcome populism and all the populist policies and try to reduce poverty and so on so forth and then suddenly, we have this administration saying, look, that's not how it's going to work now [inaudible] by himself, and so it was a shock. And now, I think that even the pandemic made this thing even more boring because we need, as I was saying before, the governments are facing very high levels of that, the companies are very in depth as well, the consumers, high levels of unemployment so trade is the only clear lifeline for these economies to recover and to have access to vaccine as well.

So the minimum that we would expect from this new administration is to change the narrative and say, look, of course, we're going to take care of our citizens, all countries should do that, but we are also going to look at the world, particularly because we are...there's externalities there. I mean, you're not going to solve the COVID pandemic, just by taking care of your own citizens. The same thing about trade, I mean, trade is...one would expect the new administration to break with this narrative that the trade is just about losing, is just about people losing jobs, and have a broader perspective. I mean, even in the U.S. if you think about it, this whole discussion about manufacturing, we are talking about, you know, less than 10 percent of the workforce. And the rest of the workforce, most of them are in services, are gaining a lot from trade. And for the region, that's what can really help to overcome this crisis. So we haven't heard from them yet, you know, this sort of shift this, this idea that we're going to do things differently, we're going to go back to the way the U.S. used to be leading the world in terms of cooperation, globalization, and multilateralism.

GARCIA-NAVARRO: I mean, and that is a profound shift, that's what you're listening for. Paul, I mean, talk to us a little bit about what you're witnessing specifically in Central America right now. I mean, you have been looking at El Salvador and what that could portend for some of the U.S.'s early involvement in the region.

ANGELO: Sure, I mean, the Biden administration has come out of the gates seeking to once again return to a policy of addressing the root causes of migration from Central America after what really were four years of the Trump administration where the relationships between the United States and the governments in Central America were significantly more transactional and certainly less focused on U.S. humanitarian and economic development assistance to the region, particularly in the wake of the 2019 absolute freeze on the administration of development and security assistance to the countries of the Northern triangle. So the Biden administration, has announced that it intends to seek about four billion dollars from Congress to be spent over four years on helping address the root causes of migration things like violence under development, inequality, and yes, even climate migration...or the effects of climate change, which are fueling migration from a region of Central America known as the dry corridor. And the Biden administration has sent very early signals that this kind of assistance will not come without conditions, but rather we conditioned on anti-corruption progress being made across the region.

And to the extent that governments and national level institutions aren't making progress into the corruption, they can likely not expect the kind of partnership with the United States that they may have been accustomed to in the past. And the Biden administration and the U.S. Congress, to its credit, have both created mechanisms to sanction officials in the northern triangle for things like paying bribes or massive public corruption. Just this past week the U.S. sanctioned two Guatemalan officials for tampering with the Supreme Court selection process. And speaking of supreme, the Supreme Court, in El Salvador over the weekend, we saw a President Bukele, who's riding a wave of popular support that's upwards of 85 percent and his new New Ideas Party, which won a congressional majority in Congress earlier this year, move to consolidate the party's power by removing five members of the Constitutional Court and the attorney general, which provoked public comments from the U.S. vice president and a call from the U.S. secretary of state to Bukele expressing disapproval of this move, which is seen as an accelerant of the Democratic backsliding that we all suspected Bukele would be engaged in be given his overwhelming popularity and his previous rhetoric that suggested his undemocratic tendencies.

The United States government right now though was put between a rock and a hard place in this regard because the U.S. government needs national leaders like Bukele, Giammattei in Guatemala, and even the extremely compromised Juan Hernández in Honduras, in order to help stem regional migration. And so a foreign policy based on democracy promotion is certainly ethical and a moral imperative for the U.S. particularly after the Trump years in which we saw our own democratic institutions endangered, but I do think that countries like El Salvador will serve as test cases for the limits of U.S. influence and credibility to advance democracy in the region. And the reality is that the U.S. and its, its rightful condemnation of democratic, backsliding doesn't really mean a whole lot in the absence of a credible domestic opposition to populist authoritarians, like Bukele. And so, in terms of U.S. policy options in the region, sanctions, if you apply them liberally only stand to alienate and isolate officials who hold legal levers of power. And so really, the key is advancing or empowering citizens and civil society, human rights organizations, the media, academia, and doubling down on those kinds of links between the U.S. government, U.S. private sector, U.S. academia, U.S. civil society, and the sort of underdeveloped infrastructure and civil society in Latin America as a long-term strategy, both for addressing the root causes of migration, but also enhancing the practice of democracy in the region.

GARCIA-NAVARRO: Celina, I want to bring you into this because we've talked about obviously trade, we're talking here about the links, the sort of human rights underpinning of perhaps the foreign policy of Biden, but one of the fundamental relationships between the United States and the region has always been on the security front. You know, particularly when we think about narcotics and other illegal activities. Talk to me about the challenges ahead on that front and what the Biden administration should be focusing on there.

REALUYO: Sure, just to look at the context, so we've been dealing in the United States not just with a Covid-19 pandemic, but a continuing epidemic in terms of opioid deaths. So if you've actually seen that sadly we've actually surpassed 90,000 drug overdoses in the year ending of September, which is a record high, and 70 percent of those deaths were attributed to synthetic opioids, which include fentanyl and methamphetamine, the majority of which comes from...coming in from Mexico. So as you know, we've always seen the security relationship based on that issue of trafficking, whether it's migrants and drugs northbound, or dirty money and arms southbound from the U.S. into the region. What we're seeing though, too, is that these countries are no longer categorized in producer, transit, and consumer states, even though the United States continues to be the number one consumer of illicit narcotics worldwide. What we're trying to figure out, though, is how can we deepen our partnerships with countries in the region in order to address all three elements of what we call the business cycle of narcotics trafficking.

Mexico itself has seen tremendous growth in terms of the different cartels and much more violent interactions among the cartels as well as confrontations with government forces. They also surpassed… they had a very record high despite all the COVID lockdowns of over 34,000 registered homicides for 2020 and those are only the ones that have been reported officially that doesn't count people who have been disappeared. So the bigger question too is, how do we figure out how to then again, kind of promote citizen security and as Paul had referred to, building the institutions that make governments accountable, especially in terms of human rights violations that have been alleged on the part of the military and the police.

The complication now though, is with the current Mexican government that has greatly restricted the operations of U.S. military as well as law enforcement components by requiring that they register any investigation or any types of operations they're conducting on Mexican soil. It started to impede a lot of what we call the operational aspects of the counter narcotics fight. Given that, we also have the issue of the migration. And more importantly, how transnational criminal organizations are really making up to, some people say, $14 million a day off the backs of these irregular migrants coming towards the United States. So in the good news category, Secretary Mayorkas of Homeland Security, actually, it's pretty interesting, last Tuesday, he launched something called Operation Sentinel, which is going to be a much broader counter network operation that's going to actually go after the facilitators and the money runners, those who are aiding and abetting the abuse of the trafficking patterns. So it's a multi-agency U.S. approach working with our foreign counterparts to actually go after the money, which is what all these criminal organizations are looking at. Unfortunately, in the U.S. though, we're going to see as we're coming out of the lockdowns, an increase in terms of drug demand. And we're actually seeing now huge seizures, fentanyl, particularly, and methamphetamine, which as you know, are even more addictive and much more lethal. And I was glad to see the Washington Post yesterday featured it in the op-ed that we shouldn't forget the opioid epidemic although all the news stories are covering COVID, we have to look at kind of how all of these things are impacting. And that's why in the Biden-Harris administration, they just published a new policy really focused on trying to address a demand reduction through treatment, prevention, harm reduction, as well as trying to address the supply side, because you can't really tackle narcotics trafficking if you're not comprehensively attacking both sides of the equation.

GARCIA-NAVARRO: In this portion, we only have a limited time, so I am going to just jump to something else because not only are there these big sort of systemic challenges, right, but there are specific regions and places that are going to be challenges we know for the Biden administration, as they have been for previous ones and I'd like to talk about Venezuela. Former President Trump did expend a lot of political capital or some anyway, though it did not have the desired effect and now we've seen six oil executives, American oil executives, who were jailed in Venezuela for more than three years, they were just granted a house arrest as a quote "gesture of goodwill," at least that's what it's being interpreted as. The World Food Program has been allowed to operate in the country as you know, that was a long-standing demand of the international community because there is a great deal of hunger in Venezuela. And the Biden administration has had a meeting this past week considering whether it's going to lift the sanctions that were put in place, or is it going to get involved in promoting dialogue between the different sides in Venezuela? I'd like to start with you, Paul, but then go around the table, how do you see that engagement playing out?

ANGELO: Well, yeah, as you mentioned, we've seen in recent weeks a flurry of activity from Venezuela, which I think should be interpreted as positive signs from the Maduro regime or administration that there are changes afoot and things like the transfer of the Citgo Six to house arrest, the entry of the World Food Program to administer food assistance to 1.2 million children, which had long been one of the humanitarian demands being made by the international community, partial agreements between the Opposition Coalition and the Maduro regime on COVAX in order to administer the vaccine throughout Venezuela, all signal a flexibility that point the direction of resumption of negotiations to address the political stalemate that goes back more than two years now. Likewise, we've seen rumors percolating out of Norway, that there may be an actual resumption of dialogue and I think other regional countries could play a facilitating role in this regard, countries like Argentina and Mexico, which have refused to sort of opine on the political discussions or deliberations that are taking place between Maduro and the Guaidó opposition, Guaidó-led opposition. And so, the Biden administration has long maintained that its bottom line in Venezuela is a restoration of free and fair elections and a return to democratic governance while advancing the human rights and alleviating the humanitarian crisis. And fortunately, the Biden administration will find support for those broad initiatives in the United States Congress, where both parties have expressed a commitment to alleviating the humanitarian crises and creating space for the restoration of democracy.

Whether or not the Republican Party will come out and major well-placed Republicans on Capitol Hill will come out in support of the U.S. administration's taking the backseat or sort of tacitly supporting or encouraging a resumption of negotiations remains to be seen. Likewise, during the Trump administration, the U.S. Department of Justice rolled out a number of indictments against members of the Maduro regime, which also tend to limit what is within the realm of the possible in terms of U.S. policy, particularly as it would pertain to things like transitional justice. So there's still a lot of questions, but nonetheless, I think the recent activities that we've seen or signs coming out of the Maduro regime are such that the United States government needs to take advantage of this possibility that there could be a peaceful resumption or restoration of democracy on the other side of the negotiating dialogue.

GARCIA-NAVARRO: Celina, what is your view on this posture by the Biden administration? I mean, do you see them taking an active role in wanting to mediate some of these disputes in the region, taking the role that they have had in the past where they try and directly intervene in these situations, like Venezuela?

REALUYO: Well, a lot of the conversation that you're seeing, and the gestures, as Paul has highlighted, show a willingness, more so than the last two years, of the Maduro regime—which by the way, is really cash strapped and feeling the pressure so as you know, Lulu, they are actually living off the illicit economy and that's where, sadly, the evasion of sanctions has allowed the Maduro regime to thrive on illegal oil sales, the illicit gold mining with gold at record prices, and then sadly too the cocaine trafficking. And we're anticipating those who have been analyzing what's happening with cocoa production and then more importantly, changes in the worldwide cocaine demand…it's actually going all towards Europe, because it's so much more lucrative and Venezuela is the key enabler of those flows from South America towards the lucrative markets of Europe.

So the bigger question is, how do you kind of maintain our commitment to the hopes of a negotiated settlement toward restoring democracy but at the same time, deal with the illegal and more private mafia state that Moises Naim calls the regime under Maduro? One area that I think that we need to, in terms of the United States, become much more active and much more generous ss this question about the access to the COVID-19 vaccine? It's a terrible humanitarian, economic, social, political crisis in Venezuela and we have no idea how bad the pandemic has been there because there's no transparency. But that's an area where I think I would see the new team actually pushing on multilateral humanitarian aid that is directly linked to pandemic relief, but especially access to the vaccine. And this is something that I think could be beneficial, not just for Venezuela, but for the region, in terms of being able to not just access it, but the bigger question is distribution, and safeguarding the distribution, so it's not politicized or co-opted by criminal organizations.

GARCIA-NAVARRO: Mauricio, I do want to talk about Brazil before we turn it over to questions, because Brazil is, I don't need to tell you, enormously important in the region, but also going through just an epic crisis under Bolsonaro, not only with COVID, but economically, which has been long standing, a political crisis. And they have been...they are on the opposite sides of the political spectrum, we have seen the Biden administration, make some overtures about giving money to support the environment, the Brazilian Amazon, where do you see that relationship going? And how, specifically in the realm of the economy, do you see the two meeting?

MOREIRA: Look, I think the new administration, the outcome of the U.S. election was really a very good thing for Brazil because a lot of the wild fantasies we're seeing in terms of policies, particularly the sanitary health policies, education, and stuff, I mean, environment. You're seeing that the pressure is starting to produce results. Now, the government is clearly showing signs that they understand the need to change policies to avoid being totally isolated in the world scene. The example of what's happening in India, I think, made it even more clear how isolated Brazil is. There's this crisis, the COVID crisis in India, you see a lot of countries, governments—even the U.S. government is much more vocal in offering support. And you didn't see that in Brazil, which had a pretty serious crisis, so they are understanding that. I don't think that they went all the way in terms of changing completely their policies, but I'm hopeful particularly with the help of governors and mayors that things are going to move in the right direction.

And there's one thing one bright spot, if you could find any in the recent Brazilian administrations, in the area of trade. It’s kind of ironic, because you're talking about the Trump administration, which wasn't exactly in favor of trade, but Brazil managed to sign very important agreement, terms of trade facilitation with the U.S. during the Trump administration. So there's something to build on in terms of improving relations, economic relations, with the U.S. which has always been a big gap in the region. Brazil is the biggest economy in the region and you can add Argentina to that as well, the Mercosur partners, and the trade with the U.S. is very small compared to the size of those economies. So hopefully, the new administration, again, if they really shift, their trade policies towards something more open and multilateral, they could build something on that. And I know, as I said before, I think this is going to be the biggest contribution that the U.S. can give for the region for Brazil recovery, and for the rest of the region as well.

GARCIA-NAVARRO: All right, at this time I would like to invite members to join our conversation with their questions, a reminder that this meeting is on the record and the operator will remind you now how to join the question queue. 

STAFF: (Gives queueing instructions). We will take the first question from Emerita Torres.

Q: Thank you so much, Emerita Torres, I'm with the Community Service Society of New York. I'm also a former U.S. diplomat, served in Brazil and Colombia. Great discussion. I'm interested to know your views on China and Russia in the region. I've been covering these issues for some time and, you know, from what we're seeing today, it's been a constant concern. But most recently, looking at vaccine diplomacy from China, major economic investments, and with Russia, they're expanding access to networks, excuse me, to markets and also energy, I guess you might call energy diplomacy with Venezuela. I'm interested to know your thoughts on how their role may change in the region and what the U.S. government, the Biden administration can do to counter that. Thank you.

GARCIA-NAVARRO: Oh, who wants to take this? Do you want to start, Mauricio, in an economic sense, or Celina and Paul? Because it's an economic question. I mean the way that they've moved in the region is through economic incentives and relationships.

MOREIRA: Exactly. Yeah. No, I think this is a great point to underline this need of having a shift in terms of policy from the new U.S. administration because what we've seen in the 2000s, was this pivot to Asia, from both the U.S. and Latin America. They all were sort of enchanted with this big economy growing in Asia, offering huge amounts of manufacturing goods, low prices, the region was exporting a lot of commodities. So there's kind of a benign neglect from the part of the U.S. of what was happening in the region. We were talking earlier about Venezuela, I think it's a huge example, what this neglect ended up producing not just because of the U.S., but other economies in the region, other countries in the region as well. I would dare to say that Chavez and Maduro wouldn't be viable without all the money that came in from China and the rest of the hemisphere just watched that happening. They, in some cases, they encouraged that happening. So, I think it's very welcome that the pivot is shifting back somehow, in part because of this discussion about the resilience of value chain they needed to have things closer to home and all discussion about subsidies and breaking the international trade rules. So definitely we need U.S. leadership in this regard, but we need U.S. leadership in terms of opening up to the region as well. I mean, we haven't seen yet signs from the new administration, that they are going to really engage in trade and cooperation of the region, removing some of the barriers for instance that Trump imposed on steel and aluminum, you know, and on the vaccine case as well. Definitely there's an area where they can clearly show look, we are not just, it's not just about Americans, it's about the whole hemisphere, it's about the whole world.

 

Look at the example of Brazil, 80 percent of the vaccine supply in Brazil is being provided by China so even a demonstration, like Bolsonaro, which is clearly anti-China for the logical reasons, they can't really do anything about that, the only thing about that they just have to change completely their policy with regards to China. So it's fundamental that the U.S. show signs that they're going to really engage the region, not just with aid. I think aid is important because of this emergency, the sanitary emergency, in the case of Central America, you had even the earthquake, the hurricanes, and stuff like that, but to the medium and long term what we need is more trade, we need more cooperation, we need more integration. And what's happened so far, this is only happening with China. Now, the only bright spot in terms of exports and region is China. Brazilian exports to China last year, which was the [inaudible] exports [inaudible], trade fell drastically. Brazilian exports to China grew by 10 percent. So there's clearly an urgency there to show that the U.S. is really willing to engage with the region, not just with aid, but in a broader sense, in terms of trade and cooperation.

GARCIA-NAVARRO: Celina, I am just going to bring that question to you briefly just because even though this is an economic issue it also, of course, is a geopolitical issue. It is about how America's perceived adversaries move in the world and have relationships and ultimately, it's an ideological battle as well. How do you see this playing out?

REALUYO: Well actually, Admiral Fowler, the head of U.S. Southern Command, in his testimony before Congress last month, actually identified transnational criminal organizations and China as the greatest threat to U.S. interests in the region. So we take a look at the Chinese presence in kind of three categories, Maurice has already spoken about the debt and then, more importantly, the infrastructure, the years of investment in terms of the relationship with China and critical infrastructure in specific countries. Then the second one is actually tech, which is where I see a lot of emerging threats regarding 5G, all types of communications technology, as well as the ability to buy Huawei cell phones at a fraction of the cost that it would be to buy an android or an apple. So you're seeing this competition on all aspects and what's disturbing from the point of view of where I sit is really how they're pushing and trying to deepen their ties with the Latin American military across the board, and they're becoming much more overt about that and it's an area that we need to watch for.

But also, we have to take a look at how the Chinese are actually themselves engaged in illicit economies, whether that's the issue of fisheries in the Pacific, or more importantly, the precursor chemicals and the fentanyl that originates from China that are fueling the drug trade around the region. And now they're also one of the key money launderers of the proceeds of that drug trade, so they have their hands in many different pots. And we've got to figure out how to reinforce partnerships with like- minded countries who share our democratic values and free trade and open economy tenants. And with Mauricio—it's really a question of how do we secure the supply chain in order to avoid the dependency that we found ourselves in a year ago, depending on so much from China. And I think we do have the basic free trade agreements architecture, where I think Mauricio pointed out that we need to actually just reinforce and be much more explicit about what those trade opportunities are in order for the whole region to recuperate out of the pandemic.

GARCIA-NAVARRO: Alright, let's go to the next question.

STAFF: We'll take our next question from Daniel Martin.

Q: Yes, Peru has been, for a number of years, one of the stars in South America in terms of its growth patterns, despite the fact that it had a bunch of crooked presidents succeeding each other. The latest iteration seems to be the battle between Mr. Castillo and Keiko Fujimori. What, in your opinion, is the likelihood of the parties that did not vote for Castillo coalescing together behind Keiko Fujimori to put her into the presidential palace as opposed to Castillo?

GARCIA-NAVARRO: Peru, I'm so glad we got here. I find what's happening in Peru fascinating at the moment and, as we saw, five presidents in five years, a lot of political instability, and now what has come to the fore is this runoff election between two actually very unpopular candidates. How about Paul, let's start with you.

ANGELO: Sure, I think what we're seeing in Peru as we're set up for presidential runoff between two extreme ideologues from opposite ends of the political spectrum. Really, it's a demonstration of the Peruvian public's rejection of the entire political class due to bad governance and corruption. And President Vizcarra, who was deposed last year by the Congress due to contracting irregularities that were tied to his position as a governor earlier in his career, I think really set Peru on a course for additional partisan witch hunts, which have become so popular in the Peruvian political culture in recent years—as you mentioned, you know, five presidents in five years. And so Peru as well, despite being an economic star for many years of the past decade, had the worst death rates in the world for some portion of the COVID-19 pandemic and perhaps arguably the worst economic contraction globally in 2020. But there was this hope that the worst is behind the country and now that we're set up for this ideological contest.

I'm very pessimistic that the parties, which are historically part of a fragmented party system, will coalesce to prevent the rise of Castillo to the presidency. In fact, in public opinion polling as of last week, Castillo had twice as much support as Keiko, although that's narrowed. And now I think the margin of support for Castillo sits somewhere above 40 percent in public opinion polling. But more broadly speaking, what we're seeing with polls is that many people have expressed an intention to abstain or to vote in blank and we saw that a similar extension in neighboring Ecuador actually gave rise to Guillermo Lasso to the presidency, despite the fact that his opponent in the race, Arauz, was favored in much of the campaign's polling, so I think anything could happen in the next couple of weeks. Castillo has attempted to distance himself from Chavez and the Chavista model of governance despite the fact that his candidacy...he emerged as a self-proclaimed Marxist who more than anything has sought to nationalize the country's mineral wealth. Likewise, his party's platform seeks to establish a new constitution and to engage in the popular election of judges and reforming the high courts, major changes that will surely set be seen in an unpopular light among the Peruvian public. But again, Keiko Fujimori is an authoritarian in plain sight essentially and has long lauded the performance of her father in office, and herself has dodged corruption allegations for most of her career. And if anything, I think she's seeking to gain immunity from prosecution if she becomes president. It's a very complex panorama, but you know, whatever happens in this election, the Peruvian people are going to find themselves in a much worse position than they did in 2020, politically speaking.

GARCIA-NAVARRO: Two follow up questions that are interrelated, where does that leave the United States in a scenario like that? Where you have Keiko Fujimori, ostensibly would be the more U.S. friendly—things would sort of end up much as they are in terms of, you know, trade agreements and other things, bilateral relationships—but as you have mentioned, is extremely problematic. And the other candidate has said that they would rip up the free trade agreement that they would...a whole series of economic measures so where do you see the U.S. wading into this, if at all?

MOREIRA: Thanks, Lulu. I mean, I'm not a political commentator—

GARCIA-NAVARRO: No, so I mean economically—

MOREIRA: Yeah, I think I'll go back to the things I was saying before, I think most important of all is it's a shame that the market-friendly option is somehow associated with an authoritarian option in this case, but we definitely don't want to see the kind of leftist populism that we saw in much of the 2000s in Argentina, in Brazil, and Venezuela, and so on and so forth. And I think what the West can do is to make sure that this strategy or development, this route to development and growth, I mean, it's going to continue to exist. There's going to be this multilateral option, there's going to still be rules based international trade system, the U.S. economy is going to remain open, and this is going to make much easier for whatever candidate to campaign on those issues. And, of course, take into account all the good results they had in the past twenty years. Of course there's a huge agenda there in terms of reducing equality, compensating the losers from trade, dealing with all the issues of the resource curse— you saw that in Peru as well—but if you shut down this door, if you really send signals that now it's everyone for himself and trade is not a strategy to growth, you have to go back to import substitution, close the economies, and this is going to be clearly this is going to help the left wing populism. And you know where this is going to end, a lot more poverty, high inflation, the poor lose the most. So I would say that the best contribution that the U.S. could give is to send signals, to say look, we're going to support trade, we remain an open economy, we will support the multilateral system. And then I think this is going to help an agenda, a healthy economic agenda, whoever wins the elections in Peru.

GARCIA-NAVARRO: Next question, please. And by the way, please raise your hands for anyone who wants to ask questions to our panelists.

STAFF: We'll take our next question from Ivan Rebolledo.

Q: Yes, Ivan Rebolledo with TerraNova Partners. My question is addressed to Paul Angelo. Paul, I wanted to ask about Colombia. Now that we see a weakened president Duque having to withdraw his tax reform bill to Congress and considering that none of his reforms have been successful, do you see a window for the United States to be more engaged with the peace process in Colombia, and in particular, greater support to the HEP courts that are in badly need of funding and support? Thank you.

ANGELO: Thanks Ivan, it's great to see you on this call. Yeah, this past weekend, late, there are a lot of problems that were sort of simmering just below the surface in Colombia. And we've seen that Duque, who's multiple times attempted to engage in a regressive tax reform, was forced to walk back his proposals this past weekend after protests that emerged in both the cities across the country. Simply because, you know, Colombia is one of the countries across the region I think that in major cities engaged in the most significant lockdowns to deal with the Covid-19 pandemic. And moreover, because it's a country where a large percentage of the population is employed in the informal economy, and we've seen unemployment rise to 15 percent, poverty has ticked above 50 percent nationwide in Colombia, it's simply—it was politically very unshrewd for the Duque administration to propose a tax reform that was essentially going to put the tax burden on a middle class that had been so deeply affected by the pandemics economic and social fallout.

And so despite the fact that it was a tax reform that would have sought to establish a basic income for the poorest 10 percent of the population, it was so unpopular that parties from across the political spectrum, to include the Centro Democratico, Duque's own party, members and leaders in Congress distanced themselves from the tax reform. And so President Duque is significantly weakened, his popularity plummeted to 33 percent, and I think as we are entering an electoral season in Colombia next year, we'll see a round of elections. This does—all of this seems to work to the favor of someone like Gustavo Petro, that being said, from a bilateral perspective, I think what came to the forefront in the wake of this past week and given that the ESMAD, which is an anti-riot police in Colombia, was potentially responsible for twenty one mortal victims in officer involved shootings, it pushed the national conversation away from the tax reform and to what really is a security sector reform, or the unfinished process of military and police transformation that began under Plan Colombia and has largely been sustained through U.S. pressure and assistance. And so now there are renewed talks for reformation of the National Police. And this is coming on the heels as well of investigations and public declarations being made by representatives of the special peace tribunal about sort of a larger number of extrajudicial murders that had been committed than was previously being publicly announced by the fiscalía in the country. And so I think what we're going to see in the year to come is a national conversation in Colombia about justice for human rights abuses and extrajudicial murders being committed by members of the security forces. And that's certainly falls well within the scope of the pro-democracy and pro-human rights rhetoric that's coming out of the Biden administration vis-à-vis its Latin American policy. And so I think that there is an opportunity for an expanded role for the United States in supporting the—in fact, in supporting the implementation of the Peace Accords, which have languished in certain aspects under the Duque administration.

GARCIA-NAVARRO: Okay, we'll take our next question.

STAFF: We'll take the next question from Peter Langer.

Q: Thank you, Peter Langer, and my question is how has COVID affected Chile's progress towards a new constitution, and what should be or will be the U.S. role in that process?

GARCIA-NAVARRO: Celina, do you have thoughts on Chile and the constitution or...

REALUYO: Actually tomorrow I'm giving a briefing to the constituyente, how timely.

GARCIA-NAVARRO: How timely, there you go.

REALUYO: And more importantly, they're actually taking a look at the topic that I covered, transnational, organized crime is a problem there. So it's interesting to see how Chile has gone up and down in terms of its management of COVID. They're actually quite worried right now that there's another surge about to approach as they're entering their winter months so they're actually trying aggressively to move to mass vaccination, just like every other country. But we have to remember, and just going back to what Paul was talking about, is that even before COVID many of the countries were already dealing with what some people would actually characterize as constitutional crises, right.

There's an actual lack of the Latin American average voter in confidence in his or her governing institutions, and we saw mass riots in Chile and in Bogota prior to the pandemic. And what we've seen, though, is that all that pent up desire for reform and new ways of governing and new parties has actually complicated the electoral landscape across all these countries. And for some reason too, we're entering a very active electoral calendar in many parts of Latin America and the Caribbean and that is where we're going to see, I think, in terms of...I'm not aware of anything explicit, but a lot of the programs in terms of foreign assistance that the U.S. has traditionally executed has been focused on institution building, and also supporting NGOs that help party formation and civil society's role as a player in the political landscape.

It's very interesting to see right now the types of topics that the constituyente is trying to gain consultations from. And for those who don't know, Chile is starting to become a hotspot for the transport of cocaine towards European and Asian markets, with huge seizures that they've never seen before. They have a very capable military and police force, they actually have an intermediary force, like the Carabinieri, that are now actually looking at how do they better train their people in terms of doing this. So it's a work in process, but more importantly, it's also, to me it's a manifestation of how other countries are really coming to grips with how disappointed they are with their current, whether it's their form of government, but I think would be actually more accurate to say, their governing elites, and the question is how do you get out of that? But I think it's something that's global that's taking hold in terms of this search for new governing institutions that will attend to the grievances of the populations.

GARCIA-NAVARRO: I could not agree with you more, I think that that is something global, but we're really seeing it play in Latin America. We only have a few more minutes left, before we close out, I am just going to briefly, briefly, ask two minutes on Cuba. Obviously, that is another sort of pending thing from the administration of former President Obama, we saw a turn under the Trump administration. Paul, just very briefly, what do you think the Biden administration is going to do there? If anything.

ANGELO: I think the initial signals out of the Biden administration are sort of wait and see what kind of signals Cuba is sending. And to the extent that Cuba continues to serve as a diplomatic and economic lifeline for the Maduro regime in Venezuela, you might think that unhelpful role has really sort of sullied the possibility for a return to the atmosphere that we saw under the Obama administration. Likewise, I don't think that the political climate in the United States right now is such that much of the Cuban American diaspora are clamoring for a return to the kind of atmosphere that we saw in the Obama administration. In fact, if there are...if we do see efforts at engagement, that particularly have the aspirations of democratically minded Cuban people or civil society at heart, I think that those sort of piecemeal kinds of opportunities for engagement are really the path that we're going to see the Biden administration take, as it pertains to the Cuban government, which by the way, just had a party conference last week, and saw Raul Castro stepped down from the helm as the chief of the Communist Party, which means that we may in the years to come, particularly if we see Raul Castro pass away, we may see some sort of flexibility, but the personalities that are still leading the party, and president and [inaudible] are very much attuned to and in line with the, sort of the historical and Castro-ist wing of Cuba's political establishment, so I wouldn't expect really dramatic overtures from Cuba for the time being.

GARCIA-NAVARRO: And we will have to leave it there. I think we've covered a lot of ground. I thank you all for your expertise and thank you to everyone else for joining today's virtual meeting with Paul Angelo, Mauricio Mesquita Moreira, and of course Celina Realuyo. And please note that the video and transcript of today's meeting will be posted on CFR's website. Again, thank you very much.

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