This Sunday Venezuelan voters will go to the polls to decide whether elected officials, including President Hugo Chávez, can run for re-election indefinitely. Chávez has thrown the full force of the government behind the yes vote, while the opposition and student movement have brought hundreds of thousands into the streets for the “no.” Many inside Venezuela and abroad believe this referendum could be the last straw, breaking Venezuela’s fragile and imperfect democracy if passed. Overlooked by optimists and pessimists alike is the real decider of Venezuela’s political future – the economy.
The referendum does matter. Ten years of single strong executive rule have taken a toll on the country’s democratic institutions. The referendum’s passage would open the possibility for Chávez to run again in 2012, and indeed to remain in office for decades to come. But, Chávez would still have to win reelection – and that may now prove to be the most difficult part.
High oil prices granted Chávez an extraordinary political honeymoon. Multi-year double digit economic growth, historically low unemployment, and prolific public spending on social programs fueled the adoration of previously excluded sectors of society. Skyrocketing consumption and the halving of poverty levels won the approval of the middle class. In fact, according to the pollster Latinobarometer, Venezuelans are among the most satisfied with their democracy in the region.
With the formation of ALBA, Unasur, IIRSA, and many others, Latin American nations are pushing towards a new era of economic, political, and social integration. But how innovative are these efforts really? Will they differ from the failed attempts of the past? I recently wrote the following article for World Politics Review on the promise and perils of the region’s integration.
The Promise and Perils of South American Integration
Shannon O’Neil
January 12, 2009
World Politics Review
In the 21st century so far, regional integration has been one of the most notable elements of South American foreign relations. Picking up speed in recent years, the continent’s heads of state have enthusiastically met in numerous summits, promising increased political, economic, social, and development cooperation. Across the spectrum, governments are expanding current integration frameworks and entering into new agreements. Expectations are no less grand. As Brazil’s President Luis Inacio “Lula” da Silva recently stated, “South America, united, will move the board game of power in the world, not for its own benefit, but for everyone’s.” Read the entire article here.
Since I published a short article on the drug war in Mexico on Tuesday (and re-published it in a posting below) I’ve received a number of responses and questions related to gun shops on the border and the weapons they sell that end up in the hands of drug cartels in Mexico. I’d like to thank everyone who sent feedback and clarify a few points.
I do incorrectly imply in the article that gun shops on the border sell hand grenades and rocket-propelled grenade launchers. The border gun shops do not legally sell these. However, these type of weapons used by Mexican drug cartels have been seized by customs officlas making their way south through the border. How they are purchased is somewhat unknown, but many of these are making their way to Mexico through the United States.
I received many skeptical emails regarding the number of gunshops along the border. In fact, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) estimates that there are about 6,650 Federal Firearms Licensees in this area, and the border is 2,000 mile long, meaning that there are 3.3 gun shops per mile (I said 3 per mile in the article). If we include all the shops in border states (not just near the border), the number rises to 9,161 locations.
I wrote the following piece on the U.S. role in Mexico’s security challenges for foreignpolicy.com.
President Calderón is fighting America’s third war, and America’s backing his enemies.
By Shannon O’Neil
When President-elect Barack Obama is sworn in next week, he’ll become the proud owner of several wars. There is the familiar mayhem in Afghanistan and reluctant optimism in Iraq. And then there is America’s forgotten war: the war on drugs. That battle’s newest front is its southern neighbor Mexico, whose president, Felipe Calderón, Obama met on Monday. If Calderón speaks his mind, he could put it simply to Obama: We are fighting your war, and you are supplying our enemies — with demand for their drugs, money for their cartels, and guns for their violence.
Mexico is fighting for its life, and Calderón has ratcheted up the battle since becoming president in 2006. Still, the picture remains grim.
Please click here to continue reading on foreignpolicy.com.
On Sunday night I appeared on the Digital Age with James Zirin and discussed blogs, public policy toward Latin America, and U.S.-Latin America relations. You can see it here.
When the United States thinks about the drug war, most focus on Colombia and Mexico. Yet concerted efforts in these two countries are leading to problems elsewhere. Argentina may be the next victim.
Drugs are available throughout the country, specifically a lower-cost and highly-addictive smokable cocaine residue called paco. News articles highlight the worries of government officials and non-governmental organizations over the social costs of increased drug consumption, both in human lives and increased crime rates. But this may be just the beginning for Argentina. In response to enforcement elsewhere, Argentina is increasingly becoming a drug producing and transit country of methamphetamine in particular, also known as crystal meth or ice.
Last July Mexico outlawed imports of ephedrine and pseudoephedrine, two common cold medicine drugs that are the basis for crystal meth. In response to Mexico’s crackdown, domestic meth production in the United States rose. But the United States is not alone. Production also seems to have moved to countries with less restrictive import rules for these basic ingredients. Two weeks after Mexico’s ban, nine Mexicans and an Argentine were arrested in Buenos Aires for running a meth lab linked to the Sinaloa cartel. Since then, Argentina has experienced several violent episodes – more reminiscent of Mexico’s than Argentina’s recent past. In two separate cases, one in August and one in October, three Argentine narcotraffickers were abducted, handcuffed, and sprayed with bullets; their bodies left to be found days later.
As the world financial crisis hits Latin America, it is easy to equate it to the repeated financial crises that hit the region in 1982, 1995, and 2001. In these past episodes, irresponsible fiscal policies by Latin America’s governments often led to and then exacerbated the region’s financial troubles. But this time around, as many analysts rightly point out, Latin American countries facethe global crisis with much sounder economic policies in place, including fiscal balances (and even surpluses), lower debt levels, and high international reserves. The quite different public economic fundamentals fuel predictions – by the UN’s Economic Commission for Latin America and the IMF among others – that the region will weather the crisis with only a few scratches.
Yet these analyses neglect the situation of the region’s private sector, which may prove to be the region’s Achilles’ heel. As Latin America’s economies slow down (due to tight credit, falling commodity prices, and falling consumer demand at home and worldwide), the poor and even irresponsible financial decisions of the region’s private sector are coming into relief.
With world markets teetering in recent months, rash financial bets – outside of the core competencies of many Latin American companies – went south. Stalwart firms such as Comercial Mexicana in Mexico and Grupo Votorantim in Brazil bet against the dollar and are now paying highly for it – perhaps with their very existence. More unwise financial bets are still waiting to be uncovered. In fact, one analyst recently estimated that derivative losses from Latin America’s largest companies could reach $50-60 billion in the coming months.
Latin America’s private sector troubles are not limited to dallying in derivative markets. Particularly troubling is the huge debt piled on by businesses in recent years, including many of the region’s largest companies. This became apparent this week when Cemex, a company long touted for its responsible and successful business strategy, was unable to refinance its debt. And Cemex is not alone. Others undoubtedly will follow, as tight worldwide credit markets limit the rollover of short term debt.
The macroeconomic and fiscal responsibility of most Latin American governments in recent years is welcome. And, it does mean that the effects of the worldwide financial crisis for the region differ this time around. But while necessary for a speedy recovery, public prudence alone is not sufficient. The financial health of the private sector – the main engine for the job creation and economic growth – is equally important. Here, the emerging data is not so sanguine, and some of it is missing or unreliable. Past crises have encouraged and sometimes forced greater reporting and transparency in the public sector, but the private sector remains somewhat of a blackbox. Yet how the private sector weathers the crisis will define the region’s economic future.
Reporters, CFR members, students, and other interested folks keep asking me if U.S. policy toward Latin America will change when President-elect Obama steps into the White House on January 20. The fact is that U.S. policy toward most Latin American countries will not change much under the new president. Obama will have several pressing issues on his plate when he steps into office, and Latin America is not likely to be one of them. But Obama does have a real opportunity to redirect U.S. relations with Cuba and Venezuela, and as a result change the tone of U.S.-Latin America relations.
The easier change in some respects is the relationship with Cuba. Obama won Florida with the support of the majority of Latinos in that state, though he lost the Cuban American vote. Since Cuban-Americans were not decisive in his victory, Obama doesn’t owe them anything. In addition, polls show that younger Cuban Americans were more likely to vote democratic, suggesting a longer term shift away from the core support for current U.S. policy. Obama said in the campaign he will quickly relax restrictions on family visits and remittances to Cuba. This could be a first step in a longer and larger policy shift toward greater opening between the two countries, and ultimately (after several bilateral steps) asking Congress to end the embargo.
These policy changes would transform U.S.-Cuba relations. But they would also reverberate throughout the region, ending what is often seen in Latin America as a hypocritical stance between U.S. rhetoric and policy realities. And, these changes are more likely to actually bring democracy to Cuba, allowing for new information and influences on the island after nearly 50 years of forced semi-isolation.
In terms of Venezuela, Obama’s presidency will mean that the personal animosity between Presidents Bush and Chavez will no longer affect matters of state. Second, Obama’s personal profile and life story will make it much harder for Chavez to dismiss him as a “yankee imperialist.” And third, Chavez is running into problems of his own. In addition to domestic problems of rising inflation and crime, falling oil prices limit his “petrodiplomacy” with other countries in the region – lowering the decibel of his foreign policy microphone that until now has been turned against the United States. Obama has an opportunity to redirect these relations, though here the opportunity is less clear. Even with oil prices nearer to $50 than $150 a barrel, Chavez still has significant resources to throw around. And, with domestic problems escalating, he needs a foil. The United States is an easy target, no matter who the president is. But a change on Cuba would also make much of Chavez’s anti-American rhetoric ring less true across the region, limiting its effectiveness and perhaps leading to a different bilateral dynamic down the road.
It’s hard to believe that Calderon is coming up for 2 years in office, one-third of his term. Much has been said of Calderon’s domestic agenda, but in the op-ed below, published in Mexico’s major English-language newspaper, The News, I analyze his foreign policy achievements. I argue that President Calderon has done much to restore Mexico’s bilateral relationships, but that so far his administration has failed to take on a global leadership role. With four more years in office, Calderon should shift Mexico’s foreign policy course to actively shape the international agenda.
It’s time for Mexico to lead
BY Shannon O’Neil
Special to The News
November 28, 2008
As he celebrates his two-year anniversary in office, President Felipe Calderón gets mixed reviews on his domestic and foreign policy. Many point to the numerous successful reforms – pension, tax, justice, and energy – that have passed as evidence he can deftly guide serious issues through a divided Congress. These achievements do stand in stark contrast to the gridlocked Vicente Fox administration. Yet others dismiss these reforms as too little, too late, and lament the wasted potential for real change.
This ambivalence is not limited to national politics. While much lower in profile, Calderón´s foreign policy elicits both praise and dismissals. It shines in comparison to Fox´s, which left Mexico’s relations with Venezuela and Cuba in tatters and U.S. relations weakened by recriminations on both sides. But as in the domestic arena, many worry Calderón is wasting the opportunity to fundamentally transform Mexico’s role on the world stage.
Upon entering Los Pinos, Calderón quickly moved to repair broken bilateral fences. In his first year, he returned Mexican ambassadors to both Venezuela and Cuba, taking the first necessary steps to re-engage with all of Latin America. He followed up with visits to Argentina and Chile, and received Presidents Tabaré Vázquez of Uruguay and Luiz Inacio Lula da Silva of Brazil at home. Through these renewed ties, his government pushed to increase trade and to further energy partnerships – all important for Mexico´s future. This new hemispheric camaraderie permitted Mexico´s successful U.N. Security Council seat bid, providing Calderón a new international platform in 2009.
While at times seeming almost desperate to ignore his northern neighbor – during his first trip there as head of state in April he even bypassed Washington – Calderón’s administration has actually made more concrete headway with the United States than many of his predecessors. The harsh realities of his “get tough” domestic agenda, and the increasing worries of U.S. policy-makers about drug-related violence in Mexico, have facilitated this newfound cooperation.
Negotiations with President George W. Bush culminated in the three-year package known as the Mérida Initiative, which provides $400 million in the first year for the fight against the drug cartels. Just as important, these discussions changed the terms of the drug war debate, getting the United States to at least grudgingly accept some responsibility in the violence and to promise to stem the flow of illegal guns and money into Mexico.
QUIET CONFIDENCE
On other bilateral issues, Calderón has been notably silent. Coming on Fox’s burned heels, he has virtually ignored U.S.-bound migration in his discussions with the U.S. president. Calls for better treatment of Mexico’s citizens abroad, and for economic development and job creation at home to stem the steady human flow outward, have been geared almost exclusively to his domestic audience. On NAFTA, too, the administration has been uncommonly reticent, particularly amid calls by U.S. democrats for its renegotiation.
Two years in, Calderón’s foreign policy has promoted better Latin American relations, and assuaged past rifts with the United States. Not bad – but not visionary. As the 13th-largest economy in the world, and according to The Economist, soon to break into the ranks of the top 10, Mexico has been decidedly quiet on the international front. It is time for Mexico to lead.
The current financial crisis provides an unprecedented opportunity. Given its own tortuous history with financial upheaval (and more than one near-death experience of its banking sector), Mexico has quite a lot of wisdom to share. And since the exclusive G-7 has given way to the G-20 in worldwide negotiations, Mexico now has a seat at the table.
Other countries understand this. Brazil is the most obvious example, and one to be emulated rather than envied. Its steady and confident leadership on the world stage (backed by good macroeconomic policies and solid domestic economic growth), seduces not just international businesses and investors, but also worldwide diplomats. Having the world’s ear, Brazil´s eminence has become a self-fulfilling prophecy. In contrast, Mexico´s more timid foreign policy stance leaves it out of the game.
In the coming months, we will likely see a narrowing of the Mexican government’s domestic policy agenda. The unfortunate combination of escalating criminal violence, the almost certain National Action Party losses in next year´s midterm elections, and the deepening of the global financial crisis will prove too much for an ambitious reform program in the second half of the president´s term. But this unlucky trifecta for the home front opens the opportunity for a more aggressive foreign policy approach. Mexico should turn outward in earnest, building on the solid blocks of support developed so far by Mexico´s diplomats. With now two years of distance from Fox´s unfortunate travails, the arrival of a new administration in Washington provides an opening for the Calderón government to shift Mexico´s foreign policy course. Through the U.N. Security Council seat, its OECD and G-20 membership, and its intricate economic, security, social, and cultural ties with what is still the most powerful world economy and government, Mexico has a chance to shape the international agenda. It is an opportunity Calderón should not waste.
About the writer: Shannon O’Neil is Douglas Dillon Fellow for Latin America Studies at the Council on Foreign Relations in New York.
Mexico: Countering Drug Violence Three weeks ago, Reynosa, Mexico–just across the Rio Grande from McAllen, Texas–exploded in violence. The Zetas and the Gulf cartels, once allies, began what may become a fight to the death. But what happened some eight hundred miles to the west on Saturday in Ciudad Juarez, when three U.S. consulate workers–two of them U.S. citizens–were killed in their cars in broad daylight wasn’t likely masterminded by drug cartel leaders.
Brazil as an Emerging Power: The View from the United States The United States has always seen Brazil as a significant regional powerhouse, but its perceived importance has risen in the last decade. Due to Brazil’s economic strength, its hemispheric leadership, and its growing geostrategic role through multilateral international forums, it has become a vital player in both regional and global politics across numerous dimensions. While US recognition of Brazil’s political and economic emergence brought the question of how Washington should manage relations with Brasilia to the fore, the ability to translate this new awareness into concrete bilateral policies and partnerships remains difficult. Whether the US and Brazil will be willing and able to form a ‘special relationship’ remains unclear.
This Sunday Venezuelan voters will go to the polls to decide whether elected officials, including President Hugo Chávez, can run for re-election indefinitely. Chávez has thrown the full force of the government behind the yes vote, while the opposition and student movement have brought hundreds of thousands into the streets for the “no.” Many inside Venezuela and abroad believe this referendum could be the last straw, breaking Venezuela’s fragile and imperfect democracy if passed. Overlooked by optimists and pessimists alike is the real decider of Venezuela’s political future – the economy.
With the formation of ALBA, Unasur, IIRSA, and many others, Latin American nations are pushing towards a new era of economic, political, and social integration. But how innovative are these efforts really? Will they differ from the failed attempts of the past? I recently wrote the following article for World Politics Review on the promise and perils of the region’s integration.
Since I published a short article on the drug war in Mexico on Tuesday (and re-published it in a posting below) I’ve received a number of responses and questions related to gun shops on the border and the weapons they sell that end up in the hands of drug cartels in Mexico. I’d like to thank everyone who sent feedback and clarify a few points.
I wrote the following piece on the U.S. role in Mexico’s security challenges for foreignpolicy.com.
