CHina Supplants Midwest Farmers
For her, the changing politics and policies have made the United States an “unreliable trading partner.”“The only way that we become their top choice would be if our soybeans were far cheaper than South America’s.”
For her, the changing politics and policies have made the United States an “unreliable trading partner.”“The only way that we become their top choice would be if our soybeans were far cheaper than South America’s.”
Despite diplomatic controversies caused by Trump’s economic agenda in Brazil, Bessent supported the use of tariffs as part of a broader effort to reindustrialise. He noted that while tariffs generate short-term revenue, the long-term goal is to encourage companies to move production to the United States, shifting government revenue towards domestic economic activity.
The idea was that to reduce dependency on imports, the state would direct, encourage, and subsidize targeted domestic industries, whose products would substitute for foreign goods (p. 136).
Boz has an ungated post from his newsletter about Latin American leaders who have Covid-19. I had been thinking of writing briefly about this as well, and he mentions what I had been thinking about:
In a presentation last week, I said my big concern was “Bolsonaro is going to survive coronavirus and then double down on being an idiot because his own survival will give confirmation bias to his belief that the disease is not that bad.” I stand by that comment.
When do we get to end the Cold War? This year has been horrible in so many ways, and some icing on the cake is that I am pretty certain I haven't heard "socialist" and "communist" as epithets this much since, well, the actual Cold War. I had been thinking about this, then read this interview between Tim Padgett and Frank Mora, who is stepping down as director of FIU's Latin America & Caribbean Center:
So it's no secret you're a Democrat – but you're a Cuban-American Democrat in Miami. You support engagement with communist Cuba. Twenty years ago, more conservative Cubans might have called you a comunista. Do you still feel like a rare bird here in that sense?Now you see a majority of Cuban-Americans agreeing with President Trump's view, which is a dramatic change in only a couple of years. But to be frank with you, Tim, that language, that rhetoric is coming back. The use of “socialism” and “communism” to try to discredit those who don't agree with the mainstream Cuban Americans is rearing its head again. And I think it's unfortunate.
It's as if we had regressed to the 1980s, when we looked the other way at the abuses of right-wing dictators and excoriated only those on the left.
Under Luis Almagro's direction, the OAS issued a remarkable statement about the ongoing public debate about the statistical soundness of the OAS analysis of the Bolivian presidential election. It is whiny, paranoid, blustery, defensive, hyperbolic, unprofessional, unconvincing, and does considerable damage to an already damaged institution. It is a PR disaster, unless you went to the Trump School of Public Relations.
Stephen Johnson has an article in Foreign Policy arguing that Iran is trying to revive its presence in Latin America, with gas tanker arrivals being a prominent example. Fair enough as a starting point. Then the article goes in an interesting direction, serving as a solid narrative about how much Iran has failed completely in the region. Indeed, there is mostly evidence that Iran is no position to do much at all--it has financial problems and few allies.
In short, I don’t think Iran will be much involved with Latin America. Unfortunately, however, the U.S. government has yet to demonstrate that it can offer any real alternatives to the rhetorical bluster. Instead, it usually just offers up its own bluster.
By some accounts, there was growing disappointment among Iran’s senior leaders over years of costly investments that never paid off.
Today I listened to a panel where a variety of experts (Arturo Sotomayor as moderator, Kristina Mani, Maiah Jaskoski, Harold Trinkunas, Adriana Abdenur, and Rut Diamint) on Latin American civil-military relations talked about the military's response to Covid-19. There were a lot of good points made, but two things in particular struck me. I should also note that these points are not attributed to any particular person.
Michael Reid writes in The Economist about the pressure in Latin America to loosen quarantines. People in poverty simply can't remain locked down without substantial financial assistance. Across the region, they just start ignoring orders.
In most cases, the minority who are not respecting lockdowns are acting out of necessity. Data from Google, which tracks mobile phones, show more movement in poorer states and provinces in many countries. Several national governments, including those in Colombia and Peru, have been swift to get emergency payments to some of their poorer citizens. But that is a big challenge: one out of two Latin Americans works informally, often relying on daily cash takings. A new popular slogan holds that it is better to die of coronavirus than of hunger.In the U.S., such resistance is embarrassingly different. People who could stay home demand their right to a...haircut. The reopen movement in the U.S. is tied closely to privilege. Even here, though, at a certain point people will resist because they will run out of money.
A group of Latin American intellectuals and former presidents co-wrote a call in Americas Quarterly for measures to deal with Covid-19. The bottom line is the need for a huge injection of cash. It's not long and I recommend you take a look. However, there are two missing elements.
First, especially in the developing world, any discussion must include a plan for graduated reopening. You might not know the exact timetable but you should define parameters. No matter how much you can realistically stimulate the economy, people do not have sufficient savings (or any savings) to withstand this crisis. They will start violating quarantines and curfews. See Otto's post about migrants leaving Lima in huge groups. At the extremes you'll see riots. So what would a reasonable reopening look like?
Second, all the talk about international cooperation needs to confront the fact that the United States is currently governed by someone who has no intention of helping.
Latin American leaders should call forcefully for international cooperation to confront the crisis. They ought to condemn export controls on medical supplies and other critical resources, and demand increased resources for the World Health Organization, contrary to the reckless decision announced by the U.S. government.I know, I know, diplomacy and all that. But there needs to be more concerted Latin American criticism of U.S. actions. And good luck getting U.S. assistance with medical supplies or anything else for that matter. The U.S. is currently an obstacle for Latin American recovery. Read more...
The World Bank has a new report, "The Economy in the Time of Covid-19," and it is grim reading. It's also well-written and highly conscious of the human suffering going on. It is, in short, not your World Bank of lore. In fact, it advocates socialism.
To support jobs and firms, governments may need to take ownership stakes in strategically important firms. To avert a financial crisis, they may need to recapitalize banks and absorb non-performing assets. If not adequately managed, these moves could open the door to rent seeking and political patronage. The process of acquiring and managing assets needs to be perceived as transparent and professional to maintain confidence in the government. This may also allow decision makers to take urgently needed measures without fearing prosecution in the future.
Strong arrangements need to be put in place to ensure that the acquisition and management of assets is conducted at arms’ length from politicians, building on the best examples of sovereign wealth funds and asset management companies in countries at similar development levels.It's a "temporary socialism" idea, with sunset clauses.
In the medium term, the priority has to be the divestiture of state assets to the private sector. Individual cases will need to be reviewed, and balance sheet repair solutions be designed. Benchmark-linked sales of government shares in companies will have to be arranged. While this is not an immediate priority, government should communicate clearly on the direction of travel, establishing a timeline and setting up sunset clauses wherever appropriate.This is remarkable, even with the temporary caveat. Corruption is the long-standing anchor dragging Latin American governance down, and we all know there is a strong elite movement to avoid accountability. The World Bank is actually advocating injecting state ownership into that mix. I wonder what "strong arrangements" would avoid turning such businesses into personal slush funds?
Over at the Washington Office on Latin America podcast, I talked with Adam Isacson about Latin American civil-military relations. I thought we had a nice, if not exactly uplifting, chat.
One point that came up that in my opinion merits more attention is the use of social media. Latest example: when the U.S. imposed sanctions on Nicolás Maduro and others, there was quickly a tweet of army support. It's just an assumed response at this point.
Also, we recorded on Friday afternoon in our respective homes and had a beer as we talked. I'd never had a beer while podcasting and I recommend it.
Mac Margolis has a thoughtful article on Covid-19 and multilateralism in Latin America. Right now governments are closing their borders precisely at a time when they need to join together to address this common threat. Alone they can't do it effectively. Regional institutions now are so ideology-based that governments move in and out of them, thus rendering them weak.
I agree with his assessment, but he does not mention one serious obstacle: the United States. We are already seeing a problem with Venezuela going to the IMF (which itself is quite amazing) because the U.S. insists only Juan Guaidó can do that. The Trump administration also has opposed UN and OAS efforts to combat corruption in Central America. The "America First" approach is built upon a paranoia of the multilateral institutions that Latin America needs.
Latin America already has a long history of failed attempts at multilateralism and unity. Hugo Chávez's latest version was founded on oil money and ideology and now is in tatters. It's always been an uphill climb, and now it's worse. It's like someone pushing back against Sisyphus, whose already carrying the damned rock.
Long before Covid-19, Latin American militaries were once again taking prominent places in politics. Sometimes this was clearly antithetical to democracy (as in Bolivia and El Salvador) and other times just a mixing of military and police functions (as in Chile) that might have negative long-term impacts.
And now the pandemic has put the military on the front lines and in large numbers. Some recent examples:
Argentina: the army is building hospitals.
Bolivia: on the streets to enforce quarantine.
Brazil: an operations center for soldiers to deal with airports, ports, borders, etc.
Chile: over 20,000 soldiers deployed to enforce curfew.
Ecuador: deployment in Guayas province (not sure if elsewhere) where there have been a lot of cases.
El Salvador: enforcing the quarantine.
Mexico: mobilization of upwards of 250,000 soldiers for a variety of purposes.
Peru: military patrols (and one dead).
Using the military in a time of natural disaster is neither unusual nor, on its face, alarming. A big difference with the current crisis is that the duration. Like it or not, a major military presence in major Latin American cities for months might well become normalized. That's not a healthy combination with presidents--Bukele comes to mind, of course--who have already shown a proclivity for using the military as a political weapon.
Like millions, I am home indefinitely. I am extraordinarily lucky, being salaried and tenured, stocked with food in a home with my favorite people. My job right now is to help keep the College of Liberal Arts & Sciences going--there are both knowns and unknowns in that regard. At the moment, my interactions are through emails, WebEx, and Skype. I am glad for meetings just to remind me that specific days and times still actually exist.
This is tough on faculty and students alike, and I feel terrible for graduating seniors who can't savor their accomplishment as much as they deserve. My own son is a graduating high school senior and he is just seeing the year sort of fizzle out.
The idea that someone in authority is even floating the possibility of 30% unemployment is terrifying. Our national leadership is weak, which is deeply frustrating, though at least the governors are stepping up. We need testing and it's not coming nearly quickly enough, which is also deeply frustrating. People are panic buying, which is bad for everyone. Those without health insurance and the growing number of unemployed are facing eviction and hunger without intervention.
The Latin American response to the crisis transcends ideology, with AMLO and Bolsonaro leading the way in being buffoons in denial on different ends of the spectrum, though at least Brazil's governors are also picking up the slack. People in favelas don't have access to clean water or hand sanitizer, yet their president mocks the whole thing. Nicolás Maduro is taking it seriously, but so many years of incompetence and corruption leave the entire population--not to mention emigrants abroad--terribly vulnerable. There is better leadership elsewhere, like Martín Vizcarra in Peru and others (Boz has some interesting charts on Latin American spread of the virus). But we are learning what can happen when you vote just to "kick the bums out" and then a crisis hits.
In my own small slice of the world, there are positive things to focus on as well. People are trying to help those who can't get out, help local businesses, share tips on online teaching, share info on where to find essential goods (stop buying massive amounts of toilet paper!) and just trying to spread some humor. Sometimes there's not much else you can do.
The Migration Policy Institute has a new report on the regional response to Venezuelan and Nicaraguan migrants: "An Uneven Welcome: Latin American and Caribbean Responses to Venezuelan and Nicaraguan Migration."
Overall, Latin American and Caribbean countries have shown openness and even creativity in accommodating large-scale forced migration flows in a short period of time. This is particularly notable, given that most countries in the region had little recent experience receiving significant immigration. But what was once an open door to newcomers is becoming a more uneven welcome, as countries grapple with strains on already overtaxed public services, ranging from schools to hospitals, and continue to search for ways to effectively integrate new arrivals into local labor markets.Looking at the map of how many Venezuelan migrants are in other countries is overwhelming. Not surprisingly, they often end up in the informal economy, then gradually resentment builds within the local population. There are just not enough jobs and resources to go around for a long period of time.
Given the scale and speed of Venezuelan and Nicaraguan migration, international cooperation will have to play an important supporting role in helping national governments craft the right responses to these challenges. So far, global efforts to respond to these two crises—both the immediate needs of recent arrivals and the longer-term investment needs of schools, hospitals, housing, and other critical infrastructure and services—have fallen far short of expectations and of the needs on the ground.With Nicaraguans, the focus is really on Costa Rica. It does not have the same regional scope as Venezuela.
In Episode 70 of Understanding Latin American Politics: The Podcast, I go it alone to vent about my flashback to the 1990s. The impact of civil-military relations in Latin America has become a major topic in the past year, and it's not good for democracy.
The Trump administration wants Latin American governments to expel Cuban doctors. Now, the program is indeed terrible in a number of ways. The doctors themselves are not treated well and, as the article points out, leave their families behind so they won't defect. The fact that they want to defect in the first place tells you something.
But here's the problem that gets far too little attention. Those doctors are providing important services to the poor and they may not be replaced. Brazil famously kicked Cuban doctors out and could not fill the vacancies. Some who did fill them quit quickly. Ecuador just expelled them in November 2019, as did Bolivia. El Salvador did so in April, though the number was quite small. Did those governments replace those doctors? There is reason to believe they did not.
If the United States insists the doctors leave, U.S. policy should include some means of replacing them so there is not simply a vacuum. The U.S., perhaps in conjunction with international organizations, should fund medical training programs and incentivize trained medical professionals to work in areas that need it (Dr. Fleischman in the show Northern Exposure suddenly came to mind). But let's not pretend that the doctors are somehow there for show as a way for Cuba to project soft power. They do serve a political purpose, of course, but they are helping people who won't get help otherwise.
Venezuela spiraled further with yesterday's events, where the Maduro government forced a leadership vote and claimed victory while blocking Juan Guaidó and others, who then held a separate vote. It was almost stereotypically authoritarian. If you're going to lose a vote, then don't allow it to happen. Looking at the regional response, you can take the more optimistic approach or the more pessimistic one.
The glass half full response:
A lot of governments responded, including some--like Argentina and Mexico--that lean more to the left. Consensus appears to be growing, though a bit of that is Evo Morales' ouster.
The Lima Group issued a statement condemning it and other things, such as human rights abuses (as well as welcoming the Bolivian coup government to its ranks). Some presidents made statements themselves. Lenín Moreno strongly criticized the move. The Argentine foreign minister condemned it. Mexico's foreign ministry urged the Maduro government to allow real leadership elections. Incidentally, Evo Morales carefully kept his Twitter account silent on the issue.
The glass half empty response:
The response, while broad, was tepid. There are calls for Maduro to allow democracy and for the international community to come together somehow, but no response goes anywhere close to proposing collective action. The U.S. does nothing but impose sanctions, which hurts Venezuelans while Maduro finds alternate means of funding the regime. The constant refrain is that there are 50 countries that recognize Guaidó, but that is not changing anything on the ground.
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