Is Barack Bullish or Bearish for Latin America?

Through a process that Latin Americans must find very strange, the U.S. is selecting its two candidates for the 2008 presidential elections. This is beginning with high-profile primary elections in Iowa and (tonight actually) in New Hampshire, two very low-profile (and unrepresentative) states. For reasons not crystal clear to anyone, voters in these states have an inordinate influence in determining the candidates who will be presented to the nation as a whole in November.

These contests have fueled a meteoric rise in the viability of Senator Barack Obama, a virtual political unknown until two years ago. Anything can still happen, including a comeback by Hillary Clinton, but Obama could be the Democratic candidate. Polls suggest he could prevail over any of the (mostly unimpressive) group of Republican candidates.

While Latin America is accustomed to being ignored (or abused) by U.S. administrations, Latin America figures importantly in this presidential campaign, especially issues such as illegal immigration, free trade agreements, energy security, repair of global alliances, alternative energies based on renewable fuels.

It is difficult to distill from what Obama has been saying any specific policies at all, let alone policies toward Latin America. At the same time, the flavor of the Democratic debates in which he has engaged and the few published remarks he has made on Latin America allow us to make some preliminary guesses.

First, Latin Americans (and the rest of the world) will certainly sense a change in the go-it-alone approach of the Bush-Cheney era during which Latin American views were rarely solicited and, if offered, usually ignored. Obama is all about repairing the image of the US in the eyes of the world with lots of rhetoric about respectful dialogue, common objectives, and “rebuilding partnerships”. He has singled out Latin America (“from Mexico to Argentina”) as offering the potential for a partnership with the US to address shared hemispheric concerns about immigration, equity, and growth. Invoking as he often does Kennedy-era rhetoric, Obama may be looking for some sort of updated Alliance for Progress framework which might involve the US joining in on new multilateral initiatives to fight poverty and inequality in Latin America. While that may come off as too high-minded and naïve, it might make a great deal of sense for President Obama to begin restoring the image of the US by working on the (mostly) friendly territory of Latin America before moving on to the Middle East and other much trickier regions.

Second, immigration reform specifically is likely to be a top priority of an Obama administration as it would for any Democratic president. This is bound to be good news for Mexico, and also for other sending countries in Latin America. All the Democratic candidates on this matter of immigration stand in sharp contrast to all the Republican candidates (except John McCain). The Republicans unleash a very fierce rhetoric against the 12-15 million illegal workers in the United States (about half from Mexico), with some Republicans (Romney, for example) arguing to expel them all! The Obama approach to this critical issue in US-Mexico relations emphasizes creating a path to permanent residence for (most of) those already in the country after imposing fines, requiring illegal residents to learn English, pay taxes, etc. Obama has also spoken (as every US president does) about increased cooperation with Mexico to raise standards of living in Mexico. One could imagine President Calderón coming up with a list of practical ways to accomplish this goal which would go beyond the empty rhetoric of the Bush-Fox era.

Third, Obama is likely to be looking for specific ways to promote trade and economic cooperation with Latin America outside the past framework of FTAA and bilateral free trade agreements with individual Latin American countries. All the Democratic candidates, Obama included, have been attacking these agreements. (Hopefully, the pending Panama and Colombia pacts will be approved before Bush leaves office.) Turning the emphasis away from trade agreements with Latin America (in which the US position is always the dominant one and little room for negotiation with Latin America exists), it might make more sense for the US to line up behind the next phase in hemispheric integration which could be the mega-infrastructure projects needed to link the Latin American economies together. This is the direction the Latin American economies want to go anyway (e.g., Banco del Sur initiative) and infrastructure is key to Latin America’s global strength in energy, agriculture, and natural resources. A more globalized Latin America would naturally tend to seek more open trading arrangements with the US. (Otaviano Canuto’s recent blog on key infrastructure projects gives many of the details of where the Latin Americans themselves think integration ought to be heading.)

Fourth, an Obama presidency will represent a chance for the US to address some of the real sore points in hemispheric relations, principally relations with Cuba and Venezuela, which prevent economic cooperation in other areas. Most Latin American governments oppose the Cuban embargo (which is driven entirely by US domestic policy) and believe that the approach to Chavez in Venezuela should be less confrontational. Obama will be coming on the scene as a leadership transition is occurring in Havana and as Chavez’ grip in Venezuela is slipping. One of Obama’s initiatives may be some sort of “dialogue” with the Cubans which in itself would be a dramatic change in US policy. Reducing the tensions with Cuba and with Chavez would create openings for Obama to re-engage with the left-leaning administrations in Ecuador, Bolivia, and Nicaragua.

Fifth, relations between the US and Brazil may never be close, but they could improve substantially in an Obama administration which would also set a tone for hemispheric economic cooperation more broadly. If the US abandons, as I suspect it will, its hegemony in regional trade talks, this will remove a major obstacle to a closer relationship with Brazil which is fearful of US dominance. This would clear the way for a President Obama to expand, perhaps dramatically so, the tentative Bush initiatives with Brazil in the field of renewable energies (biofuels), global trade in agriculture, and new technologies which are of such obvious importance to Brazil and the US alike.

Any Latin American is entitled to a healthy dose of cynicism with respect to the promise and potential of an incoming US administration. Most have no recollection of anything but indifference or, worse, meddling and interference by the US in their affairs. The argument here is that times are changing in the hemisphere. A new, more cooperative international approach by the US seems to be in the cards, and the countries of Latin America, now somewhat flush with foreign exchange and making progress on reducing poverty, are likely to welcome a new initiative by a US president with whom they can identify. While it is just one factor among many, an expanded US economic role in Latin America will accelerate the region’s lagging integration in the global economy.

4 Responses to "Is Barack Bullish or Bearish for Latin America?"

  1. Vitoria Saddi   January 8, 2008 at 11:42 am

    Tom,You seem very upbeat for Latam and for Obama! Would you agree that Democrats (in general) care a bit more than Republicans on Latin issues? It seems that you believe that Obama is the one fit to be the president. In other words, Hillary Clinton would not deliver a similar agenda for Latin America?We needed this piece so much! Thanks a lot, it was very good.Vitoria

  2. Tom Trebat   January 8, 2008 at 12:21 pm

    Hello Vitoria,The Republicans have pretty much ceded Latin America to the Democrats. Their fierce tones on illegal immigration are seen as anti-Hispanic. National security issues dominate the way they look at Latin America (the Republicans are the ones who want to build walls along the Mexican border) and this prevents them from seeing Latin America in a more positive light as an opportunity for the US economy. You are right that the Obama agenda for Latin America would be pretty much the Hillary Clinton agenda. My concern is that the previous Clinton administration never gave much of a priority to Latin America after NAFTA and the Mexican peso crisis. Would Hillary take a different approach?

  3. Vitoria Saddi   January 8, 2008 at 12:34 pm

    Tom, As you know I wasn’t born in the US. This is the first election that I will vote for President here. I think that if it wasn’t for Clinton, Brazil would not get the bridge loan from the IMF in 1999. While I do prefer Hillary to Obama, I do think that a Democrat has to win this race. Similar to the social democracts (in Europe or Latam) the American democrats are not as united as the right wings. My fear is that Hillary and Obama may ended up offseting each other and then voters (tired of these fights) may choose to elect another Republican. New York and California are not a good thermomether for the country (great majority is for the Democrats). In any case, I hope you are right!Vitoria

  4. Otaviano   January 8, 2008 at 11:09 pm

    TomI believe many of us wish you wanted to be the Chief of a certain Council of Economic Advisors…