Will Washington Invest in Its Neighborhood?
The June Summit of the Americas is an opportunity to unveil a more ambitious regional economic strategy.
Welcome back to Foreign Policy’s Latin America Brief.
Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: How Washington might increase its economic engagement in the region, the Uvalde school shooting reverberates across the U.S.-Mexico border, and an anti-establishment magnate emerges as a dark horse in Colombia’s presidential race.
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Sinking or Swimming
On Monday, the White House debuted a new policy toward Indo-Pacific countries that offers clues as to how it might navigate calls for increased investment in Latin America. In both regions, the Biden administration has been criticized for a lack of economic engagement, even as it tries to guarantee that countries take the United States’ side in geopolitical tensions with rivals Russia and China.
In Southeast Asia, “the U.S. needs to catch up with China’s momentum in terms of its economic cooperation with the region,” the ISEAS-Yusof Ishak Institute’s William Choong and Sharon Seah wrote on May 17 for Fulcrum. Focusing on Argentina, the Pontifical Catholic University of Argentina’s Ariel González Levaggi and the Center for Strategic and International Studies’ Ryan Berg wrote this week in Foreign Policy that “[w]ithout a broader approach to Latin America that speaks to Argentina’s development needs, the United States risks losing the country to China permanently.”
On Monday, the White House unveiled its Indo-Pacific Economic Framework, which proposes working with Asian countries toward goals including green investment, strengthening labor and environmental standards in business, and enacting anti-bribery regimes. The initiative aims to increase trade between the United States and Asian countries without carrying the tariff reductions of a traditional free trade deal—as a traditional deal risks not passing the U.S. Congress due to anti-free trade sentiment in both parties.
U.S. Commerce Secretary Gina Raimondo told reporters Monday that countries’ participation with the framework could still help them lower “nontariff barriers” to doing business with the United States, as opting in would make countries more attractive to U.S. businesses seeking to invest abroad.
Similar pledges toward Latin America could be forthcoming at the June 6 to 10 Summit of the Americas, especially since the United States has so far hesitated to move forward with Ecuadorian and Uruguayan efforts at securing bilateral free trade agreements. One of the stated official goals for the summit is to boost green and equitable economic recoveries throughout the Western Hemisphere.
The region sorely needs support on this front. Extreme poverty in Latin America and the Caribbean rose from 13.1 percent of the population in 2020 to 13.8 percent in 2021. And in the first year of the pandemic, the region only spent 2.2 percent of its stimulus funding on green projects, a watchdog group estimated. With serious investment in green recoveries in Latin America, the United States stands to gain chances to relocate some of its supply chains to that neighborhood; address poverty, a root cause of migration; and build political goodwill for cooperation on other matters.
If trade deals are off the table, Washington could still direct its International Development Finance Corporation (DFC) to finance green infrastructure projects in the region. Although the DFC is currently geared toward low-income countries, loosened restrictions on the agency could allow it to direct more funding to middle-income countries, which comprise most of Latin America, González Levaggi and Berg wrote.
Likewise, U.S. President Joe Biden could announce support for a capital increase at the Inter-American Development Bank, where the United States has veto power, to finance a new round of projects aimed at a green recovery. A bipartisan group of U.S. lawmakers called last year for an $80 billion capital increase at the bank that would allow it to increase its annual lending.
One factor weighing down some Latin American countries’ economic recoveries are heavy sovereign debt repayment burdens. Countries like Ecuador have advocated repeatedly for debt-for-nature swaps, in which some debt is forgiven in exchange for the government taking environmental conservation actions. Global Americans’ Guy Mentel and Robert Carlson argued this week that the United States can use DFC insurance to reassure private creditors who are considering participating in such swaps that they are a trustworthy financial operation, as it did last year with Belize. The DFC is one of Ecuador’s creditors, so it could also go further and forgive some of those loans itself as part of a debt-for-nature deal.
If the Biden administration seeks to be more conservative with public funding, it could still work to incentivize private U.S. firms to invest in the region. That was the idea behind the administration’s “Build Back Better World” program, which was announced last June but has yet to take shape. If there are concrete investments being planned as part of the program, the summit is an ideal venue to announce them.
On Wednesday, at least one Latin American leader who had previously been on the fence about attending the summit said he would be there: Brazilian President Jair Bolsonaro, who also announced he would have a bilateral meeting with Biden.
The two leaders apparently decided that there are gains to be made in official consultations. Although conversations can certainly accomplish some things, what would make the summit truly worthwhile—for both Washington’s interests and those of leaders elsewhere in the region—is a substantive economic agenda.
The Week Ahead
Sunday, May 29: Colombia holds the first round of its presidential election. If necessary, a runoff will be held June 19.
Sunday, June 5: Mexico holds gubernatorial elections in six states.
Monday, June 6, to Friday, June 10: The Summit of the Americas takes place in Los Angeles.
What We’re Following
Title 42 ruling. A U.S. federal judge overturned Biden’s scheduled termination of the Title 42 border policy last week. The measure, ostensibly a pandemic-era public health rule, grants authorities broad permission to expel unauthorized migrants at the U.S.-Mexico border, preventing them from applying for asylum. Prior to its scheduled termination this week, the Biden administration had been applying Title 42 to some, but not all, would-be asylum-seekers. Others, such as some families with young children, were allowed to apply.
The Biden administration has appealed the decision. A lengthy legal battle may now ensue, not unlike the battle over the so-called Remain in Mexico policy, which requires asylum-seekers to wait in Mexico while their U.S. court cases are decided. Instated by former U.S. President Donald Trump, ended by Biden, and reinstated by the courts, the controversial policy has now recommenced operations.
Uvalde shooting. News of Tuesday’s deadly elementary school shooting in Uvalde, Texas, that killed 21 people is resonating especially strongly in Mexico. Mexican President Andrés Manuel López Obrador said at a press conference that it was likely some of the victims “were children or grandchildren of Mexicans.” Most of the victims were Latino, as are over 80 percent of residents in the small town.
It was U.S. Customs and Border Patrol (CPB) agents who eventually killed the attacker, according to initial reports. Many agents live in the town, which lies within CBP’s jurisdiction zone of 100 miles from the U.S.-Mexico border. Agents who were at the scene were members of the elite border patrol unit known as Bortac, which is trained to exchange gunfire with drug cartels. It is separate from U.S. Immigration and Customs Enforcement but part of the Department of Homeland Security.
“In a place like Uvalde,” journalist Jack Herrera wrote for Texas Monthly, border patrol officers are “not just in town; in some respects, they are the town.”
Haiti’s debt. The New York Times calculated the loss Haiti’s economy endured as a result of more than a century of payments to France for its so-called independence debt. After former slaves won Haiti’s independence in 1804 after a bloody war against France, France threatened to re-invade the country unless Haiti committed to making a series of payments compensating the French government and former slaveowners for their economic losses due to the revolution—that is, for the money they were now losing by not owning Haitian land and slaves.
Those payments cost Haiti between $21 billion and $115 billion in lost economic growth over the years, according to New York Times estimates. Because Haiti took out loans to pay back the original debt, its last payment to France was in 1957, the Times reported.
The investigation also pointed out that a French bank, Crédit Industriel et Commercial, charged Haiti’s government hefty fees on its central bank transactions, which were then used to help finance the Eiffel Tower in Paris.
Presidential podcast. An award-winning Brazilian podcast that details the life of Bolsonaro in serialized form—Retrato Narrado, from Piauí magazine and Spotify—just published Spanish and English versions. In both new versions, the story is narrated by the New Yorker’s Jon Lee Anderson and features its original Brazilian reporter, Carol Pires.
The series recounts how Bolsonaro forged his political identity, beginning with his childhood experiences in a small town during Brazil’s dictatorship. Interactions with left-wing activists and Afro-Brazilians there help explain some of his prejudiced attitudes today, and an early interaction with reporters during his time in the army foreshadow his later adversarial relationship with the press.
Question of the Week
Former São Paulo Gov. João Doria dropped out of Brazil’s presidential race this week in response to rock-bottom poll numbers, reflective of voters’ low appetite for a centrist candidate.
Doria oversaw some of Brazil’s most successful COVID-19 vaccine acquisition deals in his state. But before he entered politics, Doria starred on what kind of TV show?
Doria became well known as a star on the Brazilian version of The Apprentice.
In Focus: Colombia’s Dark Horse
Colombians vote in the first round of their presidential election on Sunday. If no candidate earns more than 50 percent of the vote, the top two finishers will proceed to a runoff on June 19—an outcome that is virtually guaranteed, FP’s Maria Ximena Aragon writes.
Although leftist front-runner Gustavo Petro has maintained a solid lead over right-wing Federico Gutiérrez in the weeks preceding the vote, another candidate has risen so much in popularity that he might defeat Gutiérrez and make it to the second round.
That’s anti-establishment candidate Rodolfo Hernández Suárez, 77, a wealthy engineer and former mayor of the mid-sized city of Bucaramanga who is self-financing his campaign. Unlike Petro and Gutiérrez, Hernández does not have a history in national politics and did not participate in the March primary elections organized by left, right, and centrist groups. His tirades against traditional politicians have earned him comparisons to former U.S. President Donald Trump, former Italian Prime Minister Silvio Berlusconi, and Salvadoran President Nayib Bukele.
Hernández has amassed followers on TikTok and preaches an anti-corruption message with unconventional policy positions: In an interview, he told Americas Quarterly he supports legalizing cocaine and signing a peace deal with the National Liberation Army guerrilla group. But he was vague about how he would actually carry out anti-corruption reforms in the country.
Unlike Gutiérrez, Hernández has a chance of beating Petro in a runoff election. Polls last week showed the two candidates close or even tied.
To get there, the candidates and voters must make it through Sunday’s election safely and share a consensus about the results. Petro has campaigned with a heavy security detail due to a reported death threat. And he, Gutiérrez, and centrist candidate Sergio Fajardo have all voiced a lack of confidence in Colombian electoral officials at a debate on Monday night—suggesting challenges to the integrity of the election process may be ahead.
Catherine Osborn is the writer of Foreign Policy’s weekly Latin America Brief. She is a print and radio journalist based in Rio de Janeiro. Twitter: @cculbertosborn
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