From Venezuela to Argentina: The Situation in South America

Wednesday, May 31, 2017
Juan Medina/Reuters
Matthew M. Taylor

Adjunct Senior Fellow for Latin America Studies, Council on Foreign Relations; Associate Professor, School of International Service, American University 

Michael E. Shifter

President, Inter-American Dialogue

Kellie Meiman Hock

Managing Partner, McLarty Associates; Former Director for Brazil and the Southern Cone, Office of the United States Trade Representative 

Cynthia J. Arnson

Director, Latin American Program, Woodrow Wilson International Center for Scholars

Experts analyze the political challenges and economic issues of the countries in South America from Venezuela to Argentina, including a close look at recent elections and the future of international trade in the region. 

ARNSON: A hush falls over the room. That must mean it’s time to begin.

Welcome to this afternoon’s discussion. My name is Cindy Arnson. I’m the director of the Latin American program at the Woodrow Wilson Center, and it’s my pleasure to be presiding over this discussion.

You have the biographies of the speakers, so I’ll introduce them just briefly, starting with Kellie Meiman Hock, who is a managing partner at McLarty Associates and former director for Brazil and the southern cone of the Office of the U.S. Trade Representative. Michael Shifter, president of the Inter-American dialogue. Matt Taylor is the adjunct senior fellow for Latin American studies here at the Council on Foreign Relations. And when he’s not here, he’s an associate professor at the School of International Service at American University.

I am going to start with Michael. There are two countries in South American that have been very much in the news—Venezuela, of course, as well as Brazil. So, Michael, let’s start with you. Venezuela has seen an unprecedented—even by Latin American standards—crisis in economic, political, humanitarian terms. There have been over 50 days of daily protests, a mounting death toll, prisoners—prisoners of conscious, political prisoners, as well as people arrested during this time—hundreds of people wounded. What are possible scenarios going forward for an end to the Maduro regime or an increasingly authoritarian and repressive government in Venezuela?

SHIFTER: Well, thank you for that, Cindy. And thanks to the Council for the invitation. And welcome to everybody.

This is a very sad, tragic situation. It’s hard to recall anything comparable certainly in the western hemisphere in recent—in recent memory. There’s enormous uncertainty. There are a lot of different scenarios. One shouldn’t rule out the scenario that this government will stay in power, despite all of the tremendous problems that we know about, the crises. This is a government that is backed by the armed forces, that controls key institutions and, frankly, still has 24 percent approval.

It’s higher than both the Brazilian president and the Colombian president have combined, just to put it in some perspective. So while some people who support the government have clearly—are disaffected and have left, there’s still—there’s still a base of support. So that’s one scenario, that basically things continue as we’ve seen them—as terrible as they are and as much as all of us say this is unsustainable. We’ve been saying it’s unsustainable for the last couple years, and it just—it keeps going. So we should just be realistic and honest and upfront about that possibility.

A second scenario is there could be—which is not, you know, impossible—there could be a complete collapse, which would result in rampant lawlessness and violence and some sort of civil war scenario. And that obviously would have tremendously troubling implications and consequences. We should see a scenario where we begin to see some fractures within the government Chavismo forces, and some sense that this whole Bolivarian Revolution, which started in 1999, is over. This no longer can go forward.

And there needs to be some sort of negotiation with—I think it would have to be with the armed forces. Maybe not formally, but the armed forces are the real—I think the real power at this point, in the government. And there may be enough disaffections and enough fractures within the armed forces. And that I think—that you see a negotiation that would call for elections, basically. This would not be—one possibility is that there’s a coup, that the military comes in and actually takes over.

And we’ve seen coups in Latin America in another era. It’s—I don’t this is likely, but it’s not inconceivable that we could begin to see a coup. As bad as this government is, we all recall the old coups in Brazil and Argentina and elsewhere, and all that. That’s one possibility. The other is that the Brazil—that the military plays a role to kind of preside over some transition and calls elections, and there are elections. In which case, given all the polls that we know, the opposition would win, and you’d see some sort of transition to a more democratic government.

In that case, and I’ll finish here, today as we meet there’s a meeting at the Organization of American States, a consultation with all the foreign ministers in the hemisphere about the Venezuela crisis. And I think if the pressure increases from the outside, then I think there could be—you know, then I think—I think that could be helpful in sending a message to people within the government that this—that all the governments are really—are against—condemn what’s going on, and could lead to some sort of fracturing and fragmenting within the government, which could open some possibilities for a negotiated scenario. So I think there are—in that sense, the external support, while it’s not going to determine how this comes out within Venezuela, I think could be helpful, if there’s a unified and a very forceful position.

ARNSON: Thank you. Turning to Brazil—

SHIFTER: An optimistic case.

ARNSON: Right. (Laughter.) It’s not quite—well, let me—let me just frame the question. This is a country that saw massive numbers of people lifted out of poverty during the boom years of the 2000s, the expansion of the middle class, what appeared to be a consolidation of democracy after the transition from military rule. And now the eruption of I think a truly historic—not just in Brazilian terms but in world terms—corruption scandals, the number of people in the government, in the congress, in the business sector that have been—that are either being investigated or have been charged or in jail. What is the likelihood—and now we have these leaked conversations, supposedly, of the current President Michel Temer on the phone basically approving of the payment of hush-money to keep people from talking about some of the scandals.

So what do you see as the likelihood that Temer will be able to stay in power? And if he doesn’t, what happens in political terms? And I think it’s important to remember that this is a—this is a corruption scandal that hasn’t only touched Brazil. It’s touched maybe a dozen other Latin American companies, mostly through the company of Odebrecht. So talk to us about Brazil.

TAYLOR: Well, I could use many of the same adjectives that Michael used—(laughter)—tragic and unsustainable and so forth. You know, I think that the—right now there are so many balls in the air that it’s very hard to know what the most likely scenario is. Michel Temer, the president who came into office in a questionably legitimate way, caught on this wiretap with his bagman, essentially, walking around with money that he had received from the meatpacking company JBS. This really has put a lot of pressure on Temer. And I think Temer, who has always been a rather wily politician, very quickly tried to eliminate any consideration of the possibility of resignation. And by doing that, he only left two—excuse me—three or four options on the table.

One is impeachment. And the problem with impeachment is, as you said, Cindy, there are so many people who are involved in this case that there aren’t many bodies left standing. So, if he’s impeached, he would be replaced temporarily by the speaker of the House, who’s also implicated in the corruption scandal. And it’s only two or—two people down the set of successions that you get to somebody who is not involved in a corruption—any kind of corruption scandal.

The second possibility is direct elections. And this is something that many of the left would like to see happen. I doubt very seriously that that would happen, because congress would have to approve the constitutional amendment. And they can slow-walk any constitutional amendment. And so that really leaves only two potential options for removing Temer unless—and this is sort of a key caveat—unless the streets turn out en masse. And what we’ve seen is that the protests have been large against Temer, but not large enough—not at the scale of the 2013 protests that brought down Dilma Rousseff.

So the other two options are a court case, which is currently ongoing in the electoral court—the supreme electoral court. And this is a case that, ironically, was filed by a current ally of the Temer regime. And this is supposed to go to judgement beginning June 6th, so next week. It’s uncertain at this point whether the justices of the electoral court would really move forward on this. The court has seven members. Two of them are very political. Another two are supreme court justices who are fairly political. And you know, that would give you the majority that could remove Temer, but it would be hard to—you know, I think it’s very much up in the air. And in any case, any decision there could be appealed to the supreme court.

And then the final thing that could happen is perhaps Temer being investigated by the actual supreme court. That could turn into an indictment in the supreme court. And if that were to happen, the congress could approve his removal with a two-thirds vote. But again, here, this is a congress two-thirds of whom are, you know, pretty involved in—have been implicated in corruption scandals.

ARNSON: Pretty striking. (Laughter.)

Kellie, let’s turn to some at least relatively good news. President Macri of Argentina was just here at the White House, met with President Trump, had a number of meetings around town. He, since taking office, has launched this very ambitious process of economic reform to undo the economic mismanagement and corruption of previous—of at least the decade or so of the—of the Kirchner years. How successful has he been in turning around the economy? And what do you think are the prospects for his holding on the minority, or even expanding the number of seats that he has in the congress in the October elections?

HOCK: Yeah, Argentina is a bit of a bright spot. You know, I think that he has basically done the best that he could with not—without having a majority in the congress during his time in office to enact some fairly ambitious reforms and, as you say, make a good amount of progress. But if there’s anything that we’ve learned through our own electoral process last year here in the United States, is that your macroeconomic indicators can be strong but if wages and employment are lagging, the political payment can still be pretty fierce. And that’s really where he’s suffering, in that inflation is still high, wages are still relatively low. That’s creating quite a bit of discord with the labor community, which is obviously not to be overlooked in Argentina. And there’s a lot of fear of unemployment yet.

A lot of the promises that were made as far as what will happen if we enact an ambitious reform agenda vis-à-vis investment, et cetera—you know, a lot of that has not come to fruition, due to things that are, frankly, outside of his control. It doesn’t help Macri that Brazil’s going through this right when it’s their largest trading partner. It doesn’t help Macri that he really doubled down on the bilateral relationship with the United States, and now the United States is in a much different trade and investment policy stance than we were last year. You know, I think that his visit her showed that that relationship is going to continue to flourish in a positive way under the Trump administration, which I very much view as a positive.

But you know, he’s got quite a few challenges out there that I think show—and conventional wisdom is, in the midterms, that he might gain a couple seats or stay neutral. I would tend to agree with that. But certainly, you know, the congress isn’t going to make his life any easier in the coming months. And the economic challenges will continue. I think, though, at least among the elites in the business class, there continues to be a great amount of confidence in him and his team, in the way that, you know, his kind of troika of city of Buenos Aires, province of Buenos Aires, federal government is operating. And so, you know, all in all, you know, mildly optimistic going forward.

But on the corruption point as well, I mean, I think—you know, listening to you speak, Matt—you know, just preparing for this today, I just checked out a number of the newspapers. Every newspaper in Brazil, La Nacion in Argentina, El Tiempo in Colombia, and La Republica in Peru all had Odebrecht stories, if not on the front page then close today. So it does show that, you know, this is touching every country that we could talk about here today, including Argentina. And so it’s bringing, not just due to Macri, but due to these exogenous factors from Brazil, it’s bringing a lot of these anticorruption discussions to the fore in a pretty unavoidable way.

ARNSON: OK. My methodology, for those who are going to think that I’m slighting someone, is going to go—is to be one, two, three; two, three, one; and continue in that fashion. So I’m going to come back to Matt and ask about Brazil’s international role. In the 2000s, under Lula especially, under the two terms of the Lula administration and continuing, to a certain extent, under Dilma, Brazil was the rising power. It was a rising power not only in South America, with the founding of UNASUR, but it was also increasingly projecting itself as a global power, a member of the BRICS, opting out of, you know, certain Western institutions and with other emerging markets, you know, going its own way.

To what extent was that—or to what extent is that profile that Brazil has tried to have in the last decade completely undermined by the current political and economic crisis? And if things should settle down, do you see this as a—as an aspect of Brazilian foreign policy and projection going forward? In other words, what has been launched and started can never be sort of put back in the bottle?

TAYLOR: That’s a great question. I think, you know, it’s important to recognize, Dilma Rousseff herself was not particularly interested in the foreign policy gains that had been achieved under her predecessor. And so you know, this is something that there was sort of a decline in the profile of Brazil on the international stage, even before all of these scandals began to emerge. There’s certainly with Temer’s administration, under both Jose Serra and Aloysio Nunes as foreign ministers, there’s been an attempt to go kind of I would call it the Macri route. You know, perhaps turning towards the U.S. in a more open way, a deliberate way, thinking more about where agreements could be made, and also trying to find some triumphs when it’s very hard to show any kind of political victory at home.

Obviously, the scandal completely cuts the legs out under—from under that strategy. And I think, unfortunately for the Brazilians, they are having some difficulty getting heard, in part because of what’s going on at home. I do see a silver lining here though, which is that in the Odebrecht case, the Brazilian prosecution has been really an important international player, and a player that has worked to cooperate with other Latin governments, and worked to, you know, teach, to counsel, to advise other prosecutors around the hemisphere. So I think that that’s a small silver lining, but it’s an important one, especially because corruption is likely to continue to be, I think, the key issue probably—one of the key issues. It’s my hobbyhorse, so it’s the key issue—(laughter)—for I would say at least the next decade, as the region comes to terms. And it’s not just the Odebrecht case, because now we have this meat packing case, and there are many other cases that are likely to have international legs.

ARNSON: Great. Thanks. Kellie, in South America, and to focus or capitalize on your expertise in the trade realm, there are two major trading blocs, if you will—the Pacific Alliance, which also includes Mexico—of course, there’s an important part of NAFTA—but Mexico, Colombia, Peru, and Chile. And then Mercosur, Brazil and Argentina, with those two economies being dragged down, and Uruguay and Paraguay trying to, you know, find some space within that. But more and more you hear talk of convergence and acercamiento, you know, a closening of those two trade blocs. How realistic is that? And what do you see as the potential of a deeper Latin American and especially South American integration in the wake of the U.S. withdrawal from TPP and the whole sort of context of an anti-globalization agenda, if you can put it in those terms?

HOCK: Well, I think, looking for silver linings, that one of the silver linings on this topic is that south-south trade discussions are in the spotlight. You do have the Mexicans, I think very intelligently, looking to hedge their bets by getting into real trade discussions with Argentina and Brazil, particularly with respect to agricultural products. You have the Chileans and their current leadership of the Pacific Alliance, I think really masterfully handling the situation by calling very quickly the meeting that they had in Vina back in March, I believe, between the TPP countries, the Pacific Alliance countries, and their FTA partners, which also brings Korea and China to the table, which, you know, was made a great, you know, deal of hubbub in the press about the fact that China was there, despite China not being terribly ambitious on the liberalization side. But just having them at the table, and us as kind of an afterthought. I mean, we were represented in that meeting, but only by the U.S. ambassador there, no one from USTR, et cetera, although some folks from Ways and Means and Senate Finance did attend.

So you know, it does create an opening for further integration, liberalization to take place, and for it to be, for once, their idea, not our idea, which I think is a positive. That said, everything that Mat has said about the distraction in Brazil right now really does make a real integration between Pacific Alliance and Mercosur challenging. I mean, they did do a follow up meeting after the Vina meeting in Buenos Aires on the margins of the World Economic Forum. They have set out a scope of collaboration. I think that’s significant. They do plan to meet again at the end of the year on the margins of the WTO ministerial, which will be held in Argentina. Again, I think that’s significant. But it’s tough to see, with the level of distraction that’s going on in Brazil, kind of how that will come to fruition in any sort of a rapid way.

Also, I think the Chileans have been, as I said, very assertive in promoting the Pacific Alliance as kind of the TPP 2.0 solution. And they’ve been playing it on both fronts. They’ve been playing in South America, though this—you know, pushing this dialogue with Mercosur. They’ve also been pushing it on the TPP side. And, obviously, there’s preparations ongoing now for APEC and ASEAN later in the year. And they’re really trying to make the Pacific Alliance the Americas bridge into TPP. They pass, in just a matter of weeks, the leadership of the Pacific Alliance to the Colombians. I’ll defer to Michael, but I tend to think that the Colombians have so much on their plate with the peace deal that they may be a little bit more distracted and less laser-focused than the Chileans have been on promoting this trade agenda, although I hope not because I think—again, I think it’s a very positive factor.

ARNSON: Well, I remember last year when Chile became—took over the presidency of the Pacific Alliance, the big news of that meeting was the presence of Mauricio Macri from Argentina. So we’ll see what happens in Cali at the end of June. And, you know, whether that move towards South America—(audio break)—come to this hopefully later, with the election upcoming in Chile, whether Chile will continue to play that role. But we’ll come back to that question.

I want to ask Michael, President Santos was just here, visited the White House, made the rounds on Capitol Hill. Obviously seeking support for the implementation of the peace agreement, at the same time that the traditional issue that has shaped U.S.-Colombian relations, which is drugs, is, you know, front and center with this massive increase in coca cultivation. What do—how successful do you think Santos was in reaching out to the White House and to the Congress, and maintaining a sense of bipartisanship in U.S. policy with Colombia? And how is that possibly going to change over these next years?

SCHIFFER: Well, I think that Colombia is one of the few bipartisan success stories, not only in Latin American policy but I think globally. And I think there is a lot of goodwill towards the Colombian government and President Santos from members of Congress, from both Democrats and Republicans—(audio break)—to the extent that it’s nearly at the level that it was when Plan Colombia was adopted in 2000 by the—by the Congress, after it had been—(audio break)—concern. And I think that the Colombians got the message, and President Santos tried to make the case that he has a plan in order to reduce that coca cultivation. But I think if that’s not successful, it’s going to be a major problem moving forward. So that, I think, is—you know, it is one issue that’s out there.

It’s compounded by the fact that the drug issue and the (wheat ?) issue is very, very important at the outset—(audio break)—both from the United States in drug production. Now it’s gotten worse in Colombia. The issue is not cocaine, necessarily, but heroin, opioid. There’s a frontpage story in The Washington Post about that today. So I think that’s going to be an issue, and it’s going to be a major test for Santos, if he’s able to bring those levels down. And if it’s not, I think there’s going to be concern. And I think on this regard, I don’t see much of a difference between the two parties or even between the administration and the Congress. I think there’s sort of a broad level concern.

The other problem is the polarization within Colombia itself, which makes any kind of sustainable sort of support more difficult, more complicated. There’s enormous polarization, and we’re already entered into an electoral cycle for the 2018 elections, which happens less than a year from now. And that polarization is reflected in how—the positions that different candidates are taking. And so in terms of making progress on the ground on coca and other issues, demobilization, all the other things that you know better than I do are part of this agreement, it’s not the most propitious environment to make significant progress if you’re in the middle of an election campaign and the campaign has started.

And of course, the polarization means that at least one of the candidates, probably to get into the second round, will be a fierce critic and opponent of this peace deal with the FARC. And so there is a lot of uncertainty about if whoever that candidate may be—and I think we don’t know yet, it’s totally wide open—but if there’s a candidate that has that position, whether this thing is going to—is going to go forward and how that will play in Washington with different groups.

So there’s a lot of uncertainty about the domestic politics. But I think the concern that has been around for the last couple of years, but has become more acute, I think, is the profound political polarization in the country. I think there’s broad support here. I think that Santos’ visit was in general a success. But I think the message was delivered by both Congress and the administration that the drug issue really has to be addressed a lot more effectively moving forward.

ARNSON: OK. All right. I think we’re about out of time for the panel before we turn to your questions. But I have one last question about Chile. We’ve mentioned it in the context of the Pacific Alliance. Chile also has elections. Bachelet’s popularity is very, very low. There’s the expectation that the former president, Sebastian Pinera of the right will be reelected. Is there anything more to say about how things are shaping up in Chile, and why the government has landed in the position that it has?

HOCK: Yeah, I mean, I think the short answer to that is it’s very hard to govern a country effectively and keep the communists in a coalition. And I think that if you look at the way that President Bachelet 2.0 has handled her reform agenda, both economically and domestically, it’s been kind of so ambitious that it’s been a situation where, yes, they’ve achieved some things on tax reform, had to do a correction, education reform isn’t fully implemented. But you know, it’s—you know, when you try to do everything then nothing is real priority, right? And it was such a long list, including to try to keep the more left-leaning aspects, you know, of her coalition on board, that you end up kind of over-promising and underdelivering. And so I think that, you know, that’s where a lot of the public disappointment has come from.

Nothing compared to Brazil, but you have had some corruption scandals that, you know, for Chilean standards have gotten folks pretty riled up. And so you have a bit of a rejection, as you do in many of the countries in Latin America right now, against the political class overall, such that the normal kind of left-leaning coalition—you know, their leading candidate is someone who really doesn’t have a political background at all, which is primarily why Pinera is, you know, so favored going into the elections. But it’s an interesting time in Chile.

ARNSON: OK. Just a question to ponder in our heads as we, you know, think about what’s going on in the region. I mean, one of my—one my questions about the depth and the breadth of the current corruption scandals has to do whether it’s going to result in just complete alienation, you know, of the public. You know, we’ve heard over and over again in certain countries the attitude “que se vayan todos,” that everybody should just, you know, leave or get out of here. And I’m wondering overall, as people who are concerned with democracy and democratic governance, what this is going to mean for representation for political parties, for all sorts of things going forward.

Anyway, it’s time. You’ve been very patient. Time for your questions. Please raise your hand, identify yourself, and wait for the microphone.

Sure, go ahead.

Q: Thank you. Richard Downey from Delphi Strategic Consulting.

Thanks for a very good overview of the region and great issues. One of the first issues that, Michael, you addressed was Venezuela. In the category of what should United State do regarding Venezuela, for the past two years our approach has essentially been let’s not be heavy handed, let’s try and let other countries take—be involved to try and push the issue of what to do on Venezuela. That hasn’t seemed to have much effect. The Trump administration really hasn’t yet come forth with a policy of where they’re going to go, but what’s the way to go? Is it—is it to just keep doing the same, or is to add a little more pressure directly from us? Thank you.

ARNSON: Great. Michael.

SHIFTER: Well, I think that the region is coming a little bit more of the position of taking Venezuela much more seriously. It’s shamefully late and little. It should have been a long time ago. But I think—first of all, we’ve seen change in governments in the region. Second of all, we’ve see just the dramatic, accelerated deterioration in Venezuela. And that I think has led governments from, you know, Peru to Argentina, Mexico—Mexico’s a case that has—you know, as you know, it doesn’t have a great tradition of—you know, is very respectful of sort of sovereignty and non-intervention, but has taken—the foreign minister has taken a very forceful stand on Mexico. And even some of the Caribbean countries that had been aligned are now coming around.

And I think that the United States is now building on what happened under the Obama administration, Trump administration is applying individual sanctions at higher levels, including the Vice President El Aissami in February, and more recently to the eight members of the court that basically decided to dissolve the National Assembly. I think these measures are symbolically important. And I think they delegitimize the government. I’m not sure how far they go in terms of helping resolve the crisis in Venezuela. I know that there’s a lot happening in terms of humanitarian aid, just the—just the tragedy of the humanitarian crisis is real. The Venezuelan government is not accepting the aid, but people are finding ways to help their families and others who are really suffering and living in misery in Venezuela, which is just—you know, just heartbreaking.

So I think, you know, what more forceful measures? I’m not sure what they would be. I don’t think the options are great in Venezuela. And I think, frankly, however this turns out is going to be fundamentally a product of what happens within Venezuela. But as I said before, I think there are things that can be done to sort of create the—create some of the division within the government. As long as the government and the armed forces are solidly behind it together, I think it’s going to be very, very difficult to see a transition. I think to the extent that there are divisions and splits—which we’re already starting to see—and to the extent that they grow, then I think that opens up possibilities.

But my sense is that the U.S. should work with the region that belatedly, but happily, is beginning to step up and play a more important role. And certainly, we’ve heard it. We’ve seen it. And, you know, meeting with foreign ministers of the region, there’s a big change from what there was, you know, a year ago. It should have happened before, but it’s happening now.

ARNSON: Other questions? Sure. Just a quick reminder too, we’re on the record, just in case there were any—

Q: On the record.

ARNSON: Really. (Laughter.)

Q: My name is Ali (sp). I’m a journalist from Argentina, so I play like a local a little bit.

I want to—considering some of the things that have been said here, and following all the news that I do—and I speak to all the government people in South America all the time—how far we are for a return of the populist governments? I feel like we are not very far. In Argentina, Cristina in this moment nationally has around 40 percent of approval. And in the province of Buenos Aires, I think that she would be the winner absolutely if she tomorrow to election. And it’s one of the key provinces of the election in Argentina. In Brazil, if Temer goes tomorrow, Lula will be the president. His numbers are excellent. So how far we are? If I am Maduro in this moment, you know what I will do? I will wait. Because I will have all my friends in one or two years back in government and we will be back. Will be Maduro, will be Lula, there will be Cristina. So something is going on here that all the idea, the message of change is not changing at all. All the change that they thought they will do is filing. I would know your views about this.

ARNSON: There’s a Brazil piece in there and an Argentina piece. So why don’t we turn—

TAYLOR: I’ll take the Latin America piece.

ARNSON: OK. (Laughter.)

TAYLOR: Because I was thinking about this this morning actually before coming here, and thinking—you know, there was a lot of talk about a turn to the left in the 2000s and then now a return to the right. And actually, when you look around Latin America, especially South America, what you see is a turn to stalemate. And there’s a lot of stalemate. If you look at Peru, we haven’t talked about, Chile looks like it’s going that way. Brazil, I’m not sure it’s a stalemate, but a deadmate, checkmate, something like that. But you know, there is an enormous division and polarization in these societies.

Could—taking the point about Lula—could Lula come back? His chances today are better than they were yesterday, but his chances of surviving are much worse. And so I think the left in Brazil has been very deeply wounded by the past three years, certainly. And you know, is it possible for the left to come back? It could, but it would be a much different left than the PT governments of the 2000s when they had 70 percent support in congress, 80 percent support sometimes. It would be a very limited support. And I think, you know, one of the conversations that’s going on in Brazil right now is how do we overcome this polarization? What is a solution that we can brainstorm that gets all of these diverse parties out of the current stalemate and thinking about how to fix the system, fix the constitution, fix the electoral laws and so forth, so we deal with these problems?

HOCK: I mean, as far as Argentina’s concerned, you know, yeah, Cristina’s still going to be a factor, I think. Obviously, there’s a lot of the corruption investigations still going around that swirl around her and a number of her colleagues—former colleagues from the government. But one of the things macro that I worry about is, you know, the fact that, you know, yes, you’ve got a very polarized region. You’ve got a very polarized country here in the United States. I mean, the reason that we are taking the pause that we’re taking right now on trade policy is specifically due to that.

And just thinking of the executive orders that have an impact on the countries of the region—or could, depending on how the actions linked to those executive orders come out, you’ve got a review of the country we have deficits with. You’ve got a review of all of our FTAs and membership in the WTO. You’ve got a review of Buy America. You’ve got us kind of doubling down on use of Section 201 safeguards, 301, super 301, and Section 232 national security interest unilateral trade tools, that haven’t been touched in some cases in decades. So having the United States with that environment, due to our own polarized politics right now, layered on top of the polarized politics in Latin America, that dynamic is one that, candidly, worries me.

ARNSON: Sure, Michael.

SHIFTER: Yeah, thanks. I just thought, on this question, I think that we probably—it would probably be useful for us not to talk a lot about left—moving left, right, pendulums. You know, if you were—when Hugo Chavez was elected in 1998, people said, well, this is a—you know, a shift to the left in Latin America. Well, you know, if you lived in Venezuela, and you had had two—not one lost decade, but two lost decades, you had lost 40 percent of the national income of your country, it may have been pretty pragmatic and not necessarily ideological to vote for Hugo Chavez in 1998. And now we’re at a point where, once again, if governments don’t deliver, then people are going to vote them out. And so, you know, it’s a swing to the right, a swing to the left. I mean, I think Latin America has been consistently pragmatic. You know, they were pragmatic when they voted for Hugo Chavez. And how they’re pragmatic because they’re waiting for some new governments. And if they don’t perform and they don’t deliver, and we have corruption cases, they’re going to say, well, let’s try something else.

You know, this session doesn’t deal with the one case that would have reinforced your position, which is Mexico and the prospect that Lopez Obrador could be the next president of Mexico. But, you know, there are Mexicans you speak to today that didn’t like Lopez Obrador and haven’t liked Lopez Obrador, but they say, well, you know, we had two governments of the PAN. And we’ve had the PRI that came back. And we’re not very happy with what we see in either of them. Well, let’s try him. You know, does that mean that Mexico’s moving to the left? No, that means that they’re trying to find answers. And if they’re dissatisfied with what they have, they’re going to try something else. I think that’s what the region—that’s the way, at least, that I think is useful to understand the region.

Q: Mike Barnes, Center for International Policy.

The news this morning, reports that our president has decided we will join Nicaragua as the only two countries in the hemisphere that are not participants in the Paris Agreement on Climate Change. How do you see this affecting relations with respect to environmental and economic issues in the hemisphere? And what kind of response do you anticipate from our neighbors?

HOCK: Not positive. (Laughter.)

SHIFTER: It will help the Nicaraguan relationship. (Laughter.)

HOCK: No, I mean, obviously Brazil, you know, hosted, you know, the last Rio+20. And this is an issue that, yes, they’re distracted, but is near and dear to the Brazilians heart in particular. But I would say, you know, throughout the hemisphere, there is a strong dedication to environmental issues. And just speaking from a commercial standpoint, kind of where I spent my day today, you know, this is an area where, frankly, the U.S. has a lot of competitive advantage. And so stepping away from green energy just frankly as an export promotion tool, to my mind, is going to be damaging.

ARNSON: If I could just add to that, I think that, you know, some Latin American countries are really in the forefront of those that are suffering the most from the effects of a changing climate. Not only small, Caribbean states, but you look at a country like Peru, where you have the major metropolitan area of Lima basically in a desert, the major population center. And I don’t remember the percentage of glacial disappearing, but it’s something like it’s—something very dramatic, like it’s 7 percent of what it used to be. And that’s the fresh water that comes down from the Andes for the rest of the country. So there are many, many places in the region that are ground zero for feeling the effects of this. And that’s a disappointing development for U.S. leadership, I have to say.

Others? Sure, up here.

Q: (Inaudible)—from (Peterson ?).

Michael, do you think that the elections in Colombia next year are going to be around peace or around anticorruption? Because I think anticorruption is becoming more and more an issue. And peace is becoming, like, OK, there’s peace. Let’s move on. Let’s try to do something out of what we have now.

SHIFTER: Well, I think—you know, I think the election should be on not only anticorruption but should be on the other issues on the agenda that have been sort of neglected—you know, education, employment, health, all those issues which people don’t talk about enough in Colombia because it’s been so—to deal with the peace issue, which is understandable. I think that the corruption issue will clearly be there. But my concern is that—you know this better than I do—given the dynamics in Colombia, I mean, corruption is something that is—you know, is extended across the border in Colombia and elsewhere. In Brazil you see it. And there’s no party or no side of the spectrum that is spared.

And that’s true in Colombia. That’s true in Peru. And it’s true everywhere. So whereas the peace issue, there is a real partisan kind of incentive and motivation to push that for political reasons. So if, you know, somebody who was against the peace agreement, you know, wants to win, that—they’re going to sort of make that the issue. And then the others will react to it and try to defend the peace agreement, defend the peace accord. So I think the corruption issue will unquestionably be there, but I’m just concerned, knowing Colombia and having listened to some of the speeches already of the precandidates, that the rhetoric may be pushed in a direction, unfortunately in my view, so that this peace issue once again—as it has been for the last how many years, the last decades—becomes the central issue. It shouldn’t be, but my concern is that might be, although the corruption issue is clearly going to be there.

ARNSON: In the back.

Q: Thank you. Vivian Lowery Derryck, the Bridges Institute.

And thank you, panel, really a good tour d’horizon. I very often look at regional institutions. And I’m wondering the effectiveness of the OAS. I’m thinking about Africa and ECOWAS, and how they turned around Gambia. So I’m wondering what the perception is, both among governments and among—if there’s any thought about the OAS among citizens and civil society. Thank you.

HOCK: Maybe Michael, for you, but my view is that, you know, the Venezuela situation and the reliance by not just the U.S. but a number of the countries—you cited them earlier—leaning on the OAS to kind of get us through this process has been really revitalizing in a way. But you’re closer to it.

SHIFTER: Yeah, I think that, you know, we may know more this afternoon about the OAS, after this important meeting of foreign ministers, and what ultimately is the result of the role of the OAS in Venezuela. We do certainly have a secretary-general who is much more vocal and much more outspoken about issues on democracy and human rights, especially in Venezuela, which has been the main focus of his concern. But, you know, multilateral organizations also need to have governments that come together as well if they’re going to be effective and really produce decisions that are really, you know, sustainable. And that—you know, the OAS has challenges in that regard. And we live in a—in a fractured hemisphere and region.

And so it’s hard to build a consensus which underlies the OAS and really is the nature of the OAS to move forward on a lot of positions. And so that’s been a real challenge, coupled with the challenge that financially, you know, the OAS is not in good shape, supported mainly by the United States. But that percentage of support is going to go down over the years. And there’s a real test of, you know, do the governments want to take it seriously, consider it an effective instrument, especially on political issues, on democracy and human rights issues. We have the bank that deals with economic and social development.

And one of the problems with the OAS is that it does everything. And I think it should focus on what its mandate is, which is as a political forum dealing with democracy and human rights. They’re all very valuable parts of the OAS—the Interamerican Human Rights Commission is very important. So I think it’s a mixed picture. I think now, as Kellie said, the Venezuela issue is a real test to see what it can accomplish. But there needs to be a lot more work and support from all the member governments, including the United States, by the way. Even though there’s financial part of the United States, there’s no—there wasn’t an ambassador for a good part of the Obama administration to the OAS. There’s no ambassador now, acting ambassador. And it would help to have somebody of stature and authority representing the United States at the OAS, I think, to really push on some of the reforms that need to take place.


TAYLOR: Well, I agree with everything that they both said. But I would also point to the fact that the OAS has taken—today is behaving and performing in ways that are much improved by comparison to where it was even in the not-so-distant past. And so there’s been a reemergence partly because some of the competing institutions in the hemisphere, like UNASUR, have not been competing as heavily. And so I agree with the points, but I do think that there’s been some improvement in recent years. And Venezuela will be a test. I think it’s unlikely that today will be the defining moment for the OAS with regard to Venezuela, but it certainly played a very active role that other institutions—multilateral institutions have not been able to play.

ARNSON: Over here. Sir.

Q: Thanks. John Yochelson, unencumbered by much knowledge of this region, here to learn. And thank you.

I’d like to circle back to the—to the role of the media in South America. You mentioned the impact of the corruption issue. How has that affected the standing of the media? You mentioned the issue of political stalemate. How has that affected, also, the standing of the media? And, broadly speaking, perhaps you can compare the challenges facing U.S. media with the challenges facing South American media.

ARNSON: Who wants to take that?

TAYLOR: I can. I think, you know, in many of the larger countries of Latin America, the media is extraordinarily concentrated, and what that typically means is that you have a fairly partisan media in some countries. The corruption scandal has further politicized the media, and I think this is very troubling for the long term, especially for democracies in the region.

That being said, you know, new media sources and social media have played an extraordinary role in all of the corruption scandals across the region in the last three to five years, and so there is more—there’s some democratization there. But I—you know, drawing on the Brazilian case, there are essentially three to four big media outlets, and much of the local media draws on their reporting and on their stories and on their investigative work. And, you know, that can be good, but it can be just an echo chamber for some of these allegations, especially—you know, that can be good as long as it’s not as partisan, but when it becomes partisan and an echo chamber then, you know, it, I think, undermines democracy.

And one of the critiques that Lula’s defenders have made is that they are essentially being pilloried for crimes that other parties have been committing as well, and that they’re the only ones who are targeted by prosecutors, by judges, and by the media. I don’t necessarily agree with that perspective, but I think that you can imagine the effect that has on the standing of the media, and therefore on the beliefs that people hold about the information that’s circulating in those democracies.


Q: Tom Petri.

On the corruption scandals, how much of a focus is there on the payors as opposed to the payees? And are there things we as a country could do to make it harder for people who are in business to be payors to these politicians?

TAYLOR: If I may jump—well, you can jump in too, but—(laughs)—

HOCK: Sure, please. I’ll jump in after if that’s fine.

TAYLOR: You know, I think the U.S., in December, reached a settlement with Odebrecht and Braskem, which is a very important signal to payors. And this was a joint settlement between Brazil and Switzerland and the United States. Importantly, I think 80 percent of that settlement went back to Brazil, and I think that sent an important signal to Brazilians about what our intentions were.

More broadly, you know, I think that the Lava Jato investigation in Brazil is the first time any payors have ended up in jail, and it’s one of the first times politicians have ended up in jail too. But it’s a really important signal—(audio break)—investigations that are all beginning to converge. And there’s Lava Jato, but then there is an investigation of the revenue service, and there’s an investigation of the meat-packing industry, and there’s an investigation of the pension funds. And just today there’s news of some fairly major new businesspeople being brought into the investigation. And so there is a question here what that’s going to do to the economy, and so there’s some pushback from the business community saying, you know, it’s one thing to investigate corruption, it’s another to completely destroy the economy. Again, here everybody has their own perspective on this. Judge Moro, who’s at the head of the Lava Jato investigation, said, look, I’m not trying to destroy the economy, I’m trying to destroy the corruption.

HOCK: Yeah, and which I guess begs the question, you know, can you have a 26-state democracy with over 30 political parties and have that survive without corruption? Or do you have to do what you were talking about before, political reform, which, at the end of the day—I mean, it is an opportunity, a justification—I’m not saying it’ll happen; it’s too hard of a nut to crack—but it is an opportunity to at least, I think, start talking about political reform in Brazil.

And, you know, the other piece is, you know, to really start talking about government procurement and how that’s handled. I mean, my bias a former trade guy is, you know, let’s start talking to Brazil about, you know, acceding to the Government Procurement Agreement. Now, of course, that would have been easier to say when we didn’t have an executive order reviewing our own government procurement commitments—(laughs)—so it’s a missed opportunity in that regard.

But, I mean, I do think that it’s something that needs to be discussed. You know, this is really one of the first times in, you know, Brazilian history that U.S. companies needing to operate under the rules of FCPA is actually a value add. It’s actually a benefit to be able to say, look, we’ve got to follow by these rules, because it is going to take, I think, that sort of a page turn. You can’t—you can’t turn the page on what’s going on in Brazil right now and staunch the bleeding and stop the economic decline unless, in my opinion, you actually get at the root of the problem, which at the end of the day involves those two issues.

ARNSON: One more question. Please.

Q: On Venezuela, I mean, if I might just push you a little bit. You know, I’m Mark Penn, and I worked in a few elections in the country over the—over the years, none recently.

But it looks to me that the government has really lost all legitimacy in its actions, and the people are suffering, and—from the emails and things that I get from people I still know down there. When you use the phrase a “test for the OAS,” do you really mean that, like Manuel Noriega’s government, the question is will someone remove this government, because otherwise the internal process of removal is complete civil war? Or when you use the word “test,” do you just mean, you know, something else?

SHIFTER: I mean that—no, I don’t—I’m not talking about Noriega—

ARNSON: Send the Marines. (Laughter.)

SHIFTER: —a replay of Noriega, no. “Test” meaning that there’s not this kind of very, which it has been in the past, kind of a moderate, you know, expression of concern about all of the emails that you’re getting about, you know, we worry about people, but that there’s a much higher level and much more forceful diplomatic pressure.

Venezuela cares about that. You know, they’re sensitive to it. So it’s—I’m not saying that this is the solution. You know, I’m not naïve enough to think that’s the solution. I think the solution, whatever it is—and hopefully it will come soon, and hopefully it will be democratic—will be a product of what happens internally. But a test meaning that there is a—first of all, there are more countries at a higher level that are much more forceful.

Now, the—now, the extreme case that Venezuela could do—I mean, the OAS could do is to invoke the Democratic Charter, which was approved on September 11th, 2001, in Lima, Peru. And that would—if they do that and they get the two-thirds votes to do that, that would mean a suspension of Venezuela from the OAS. But the Venezuelans already said they’re going to leave the OAS, so that kind of dilutes the impact of that.

So the instruments are limited. I mean, let’s not—you know, I don’t think we should kid ourselves. But it’s a test in the sense that they’re—that you really have to get foreign ministers and presidents, and there is some suggestion of getting some sort of ad hoc coalition that comes out of this OAS meeting of a group of countries of Brazil, Mexico, of Argentina, of Peru, of Colombia, and others, really to exert much more pressure than we’ve seen so far. Is that a guarantee it’s going to work? No. But I think it’s worth a try, and I think the OAS is a place where that could produce something like that.

ARNSON: OK. Final comments. Matt, Kellie, final word?

HOCK: I’ll leave it at that.


HOCK: Thanks.

ARNSON: Thank you all for joining us as the panel. Thanks, everyone, for being here. (Applause.)


This is an uncorrected transcript.

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