In the short term, slower growth in 2005 is putting many of the region’s governments under renewed social and political pressure to implement more effective growth and wealth redistribution policies. Social tensions are most likely to escalate in Argentina, Bolivia, Brazil, Paraguay, Peru and Ecuador.
Protests could push Bolivia closer to the brink of a civil war and could compel the president to deploy military units to maintain order even if Rodriguez reaches an agreement with congressional leaders to hold general elections in December 2005. Protests will not force Rodriguez’s resignation or succeed in bringing radical left-leaning groups to power.
Although political tensions there are nowhere as high as in Bolivia I also anticipate protests in Ecuador. In Peru, President Alejandro Toledo Manrique will continue to clash with foes in Congress. He also will face more instability in the heavily indigenous territories of southeastern Peru, though this is not likely to spread massively into Lima, where there are not yet any significant social or political activist groups like the ones that have toppled presidents in Bolivia and Ecuador.
Venezuela’s confrontation with the Bush administration will persist in the near term, Senior Bush administration officials now routinely describe Chavez as a threat to regional stability, and the White House will intensify efforts to isolate and contain him as he continues to align Venezuela more tightly with Cuba. However, none of Venezuela’s neighbors, including Colombia, will cooperate with these containment initiatives by Washington. Meanwhile, Chavez will accelerate moves to militarize his government and dismantle democracy in Venezuela.
As before, the escalating tensions between Washington and Caracas will not trigger a suspension of Venezuelan oil exports to the United States. Chavez needs a sustained flow of high oil revenues to finance his Bolivarian Revolution.
In Brazil, the government of President Luiz Inacio “Lula” da Silva and senior members of the ruling Workers’ Party also will be hammered with more charges of corruption. Opposition leaders will ratchet up their demands for da Silva’s resignation and will seek to implicate more of the president’s political allies in corruption scandals.
Faced with chronic gas supply shortages—stemming from the lack of capacity expansions in Argentina and from Bolivia’s political crisis—the governments of Chile, Argentina, Brazil, Uruguay, Paraguay and Peru will seek to accelerate creation of a new regional supply network based on Peru’s natural gas reserves. Over the next few months, Central America’s leaders will press forward with plans to create a supranational rapid deployment military force to combat drug traffickers and street gangs called “maras” in the region. However, Costa Rica will not join the proposed new regional security force, since it abolished its armed forces in 1948 and is not interested in militarizing any component of its national police forces.
Also more political turmoil is likely in Nicaragua There likely will be more street protests organized by Sandinistas, and Congress could seek to impeach the president.
In Haiti, political violence will escalate as armed groups—some that support and others that oppose former President Jean-Bertrand Aristide—seek to sabotage new national elections scheduled for the fourth quarter.
Mexico’s security crisis will deepen, stoking tensions between the Mexican and U.S. governments over Mexico’s inability to control violence along the international border with existing civilian police forces. Some foreign investors already started canceling planned investments in Mexico, and the tourism industry also will be affected.
In the longer term, The United States will use this power to advance its strategic interests in Latin America. These interests include assured access to oil and gas reserves, battling “narcoterrorism” regionally and eradicating drug trafficking, opening up markets for U.S. exports and investment and locking the region’s governments into U.S.-centric trade agreements that Washington will leverage to achieve U.S. security objectives.
Regardless of which option current governments in the region adopt, Latin America and the Caribbean will remain dependent on exogenous forces for their growth -- including the United States, China, Europe and fluctuations in the price of oil and other commodities. This vulnerability to factors that its governments cannot control or influence implies that Latin America might experience new external shocks also over the long term.
For example, an economic downturn in China would hurt South America’s largest economies—Argentina, Brazil and Chile—with ripple effects likely in the region’s smaller economies.
Latin America’s problems - sub-par economic growth rates, widespread poverty and social and political instability - will persist because old and new ruling elites are unable or unwilling to reform their political institutions and economies. At the core, there is both an institutional and cultural resistance to change in the region. Also, populism and nationalism will remain forces in governance and politics.
Latin America and the Caribbean will also divide into three geopolitical sub-regions or spheres during the coming five years. One of these sub-regions includes Mexico, Central America and the Caribbean. Demographic, economic and political factors will draw this group of countries more tightly into the U.S. sphere of influence. However, the countries’ relationship with the United States will be uneasy at best because Washington essentially will dictate the terms of engagement. Security, immigration and trade will be the major U.S. priorities in relations with this group of countries.
U.S. involvement in Central America’s security crisis involving the “maras,” or street gangs, will get deeper. Trade and immigration will bind Central America more closely to the United States over the coming decade, deepening the roots maras have in both Central America and the United States. For Washington, helping Central American governments control the maras more effectively will become an important component of a broader U.S. national law enforcement effort to contain the proliferation of maras in the United States. Self-interest also will compel Mexico to cooperate more closely on regional security issues with the United States, because rising gang-related insecurity in Central America increasingly will spread into Mexico.
The second sub-region consists of the Mercosur customs union countries—Argentina, Paraguay and Uruguay— that will be influenced by Brazil’s drive to make itself South America’s most influential power and a global player in the realm of multipolar strategic alliances that commonly reject U.S. hegemony. Brazil will displace Mexico as Latin America’s largest economy probably by 2007. However, Brazil’s increasing economic influence in South America will not displace U.S. economic dominance there. Brazil’s economy is less than one-twentieth the size of the U.S. economy. Moreover, I think internal commercial differences in Mercosur - particularly between Argentina and Brazil - likely will affect its political unity.
The Andean region will be an unstable flashpoint, and politics in the core Andean countries -Bolivia, Ecuador and Peru -will be shaped by indigenous activism, ethnic separatism and new populist political leaders with nationalist agendas that appeal to the poor. Popular rejection of U.S. influence will be an incremental force in the Andean region and might intensify if free trade agreements (FTAs) with the United States are implemented. Washington is likely to implement FTAs with Colombia, Peru and Ecuador by 2007. However, U.S. plans to negotiate an FTA with Bolivia could be delayed by persistent political instability in that country.
The key countries over the coming years in terms of affecting regional geopolitical developments are as already mentioned , Colombia, Venezuela, Brazil and Cuba. Bolivia also could be a flashpoint for broader regional instability.
The Colombian conflict will intensify as a result of extended U.S. support for a sustained Colombian military offensive against rebel groups such as the Revolutionary Armed Forces of Colombia (FARC). At the same time, the military offensive in Colombia will push the narcotics trade and irregular armed groups into neighboring countries, expanding the frontiers of the original Colombian battlefield. I expect President Alvaro Uribe Velez to be re-elected in the first half of 2006. The FARC will seek to assassinate him between now and those elections. If he wins, the rebels likely will redouble their efforts to kill Uribe in an effort to slow or derail the military offensive against them.
Even if Uribe is killed, the Colombian government would be plunged into a major political crisis and the Colombian people would be shocked. However, a constitutional successor to Uribe likely would assume power quickly, and the Colombian army’s U.S.-backed offensive against the FARC would continue. After five years and more than $3 billion in mainly military aid from Washington, the Colombian army’s war against the FARC has a life and momentum of its own.
Chavez’s development model is based on high oil revenues and continual public spending increases. It is an unsustainable model based on uncertain exogenous forces. If oil prices drop to around $25 per barrel or less in the next four years, Venezuela’s economy could suffer a crisis that undermines popular support for Chavez. However, I think Chavez has sufficient foreign exchange reserves to weather an economic downturn through the end of 2006, when new elections will be held.
Washington will respond to the obstacles Chavez represents by seeking to isolate him politically, and perhaps economically. But I think the Bolivarian revolution could continue in Venezuela for years, even without Chavez, because his government and revolution are populated with thousands of people with an economic stake in keeping the process going.
Castro will not live forever, Spain and China show interest in a post-Castro Cuba -the Spanish for historical and cultural reasons, and Beijing because Castro’s demise could upset a regional Chinese intelligence network based in Cuba.
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