This article is translated into English by the author which has been earlier published at PolÃtica Externa , a leading Brazilian Fo...
This article is translated into English by the author which has been earlier published at PolÃtica Externa, a leading Brazilian Foreign Policy Journal in Portuguese Language.
By Dr. R. Evan Ellis
Introduction
In an April 2015 speech, U.S. Secretary
of Defense Ashton Carter affirmed the significance of the trade regime that
prevails in and between Asia and the Western Hemisphere, calling the success of
the Trans-Pacific Partnership agreement (TPP) as important for the U.S. as
having “another aircraft carrier.”[1]
The U.S. is not alone in recognizing the
strategic importance of the Pacific. The
People’s Republic of China (PRC) is similarly maneuvering to assure that the organizations
and rules for commerce between Asia and the Western Hemisphere are as favorable
as possible to its own interests, proposing a new “Free Trade Area of the Asia
Pacific” (FTAAP) at the November 2014 Asia Pacific Economic Cooperation forum (APEC)
leaders’ summit in Beijing, as an alternative to the TPP.
 |
| 22nd APEC Summit at Beijing, November 2014 PHOTO COURTESY: Straits Times |
Nor is the contest over the TPP and the
alternative FTAAP the only front in the struggle to define the regime that
prevails in the Pacific. In January
2015, the PRC hosted a summit with the Community of Latin American and
Caribbean States (CELAC), lavishing promises of loans for, investment in, and
trade with, member states of the organization.
The China-CELAC summit parallels the approach used by the PRC in
engaging the nations of Africa through the Forum on China-Africa Cooperation
(FOCAC), established in October 2000. In
both cases, its region-level multilateral engagement focuses on distribution of
gifts to individual regimes from a benevolent PRC, grouping those countries on
China’s terms, yet relating to each separately.
The re-emergence of the PRC as a global
power has not only increased economic, political, and other interactions across
the Pacific, but as the struggles over TPP, FTAAP and the China-CELAC forum
suggest, it has also increased the strategic importance to the norms, rules,
and structures that govern those interactions.
For Latin America and the Caribbean, as well as for the United States, Canada,
and the countries of Asia, the ability to prosper in the evolving global
economy, and to a degree, their position as nations in the global order, are
strongly affected by the “regime” of formal and informal norms, rules and
governance structures that prevail in the area encompassed by Asia and the
Americas. Ensuring that this regime is characterized
by rule of law, free trade, protection of intellectual property, and democratic
governance is a strategic imperative, not only for the United States, but also
for the rest of the community of nations on both sides of the Pacific which
aspire to an equal opportunity to prosper from their own achievements.
The struggle for the future “regime of
the Pacific” is not going well, in part, because the U.S. has only focused on
half of the problem. Although the Obama
administration’s much discussed “re-balance to the Pacific” technically includes
the Western Hemisphere as part of the area of focus, in reality, attention has
been predominantly directed to Asia.[2]
The continued growth and domestic
stability of the PRC, and the sustained rule of the Chinese Communist Party
will play an important role in shaping the strategic landscape in the Pacific,
as will the interaction of China with its Asian neighbors, including strategic
projects such as the China-funded “Silk Road,” and institutions such as the new
Asia Infrastructure Investment Bank (AIIB).
Nonetheless, on the “other” side of the
Pacific as well, the political and institutional orientation of the Western
Hemisphere, and the policies of its governments regarding trans-Pacific trade
and investment, associated agreements and organizations, and the posture toward
foreign participation in domestic markets, will play a significant role in
defining the formal institutions and rules, and the informal norms of
governance that prevail in the Pacific.
The relationship of the America’s with
Asia brings into play multiple levels of identity in both regions, as well as
competing interests and perspectives regarding how the Americas can most
effectively engage with Asia and the rest of the global economy.
 |
| Bolivarian Alliance for the Americas (ALBA) |
At the hemispheric level the Americas are
currently divided between competing vision for engaging with Asia and the
global economy. One, loosely represented
by the U.S., Canada and the nations of the Pacific Alliance, emphasizes free
markets, improving efficiencies and expanding synergies between member states. The other, represented by the regimes of the
Bolivarian Alliance for the Americas (ALBA), Argentina, and to some degree,
Brazil, emphasizes the role of the state in brokering international commerce,
regulating access to markets, redressing social inequities, and driving
development. Such differences echo
debates within the region during the Cold War, regarding how to engage with the
global economy, although the current discourse is as much about China, as about
the United States, complicating the traditional alignment between economic
ideology and foreign relations preferences among groups in the region.
On the Asian side of the Pacific, as
China relates to Latin America and the Caribbean in the context of such
divisions and complexity in the Western Hemisphere, it has adeptly alternated between
a more market-oriented style of engagement, and state-to-state interactions, as
appropriate to the posture of its partner.
It has also advanced its strategic
objectives in the Western Hemisphere through an adept combination of multilateral
and bilateral engagement. Through its multilateral
relationship with CELAC, for example, the PRC conducts quasi-political
engagements with the region, including nations that do not diplomatically
recognize it, such as Paraguay, most of Central American and about half of the
Caribbean. Indeed, the Dominican
Republic, which currently does not have diplomatic relations with the PRC, will
formally represent CELAC to the PRC in 2017 when it holds the presidency of the
organization 2017.
The China-CELAC relationship further
allows the PRC to facilitate work for its construction and other companies in
the region through multilateral development funds such as the $35 billion fund
for the region that Chinese President Xi announced in Fortaleza, Brazil during
his July 2014 trip to the region,[3] or
the BRICS bank, initially capitalized at $50 billion. Yet at the same time, the PRC also courts each
of the region’s governments individually, leveraging the size of the Chinese
economy, the enormous quantities of money it has available to lend or invest, and
its ability to coordinate between government, companies, and financial
institutions, in order to secure commitments and terms advantageous to its
interests.
Beyond the PRC as well, the activities of
nations such as Japan, Korea, Russia, and India in Latin America and the
Caribbean are also relevant, and will play an important role in coming years in
shaping the system of governance that emerges across the Pacific. The interests of these Asian actors in the
region are, at times, competing, and at times complimentary, creating complex
dynamics within the Western Hemisphere, as well as interesting options for
multilateral strategic partnerships.
Latin America’s Competing Visions for
Engaging with Asia
By contrast to the debates in Latin
America and the Caribbean during the 1960s and 1970s regarding the region’s participation
in the international system as a vehicle for development, the region today is
not divided over the question of whether to engage economically and
politically with Asia, so much as how to do so.[4]
As noted previously, in engaging with
Asia and the rest of the world economy, a subset of Latin American nations loosely
represented by the Pacific Alliance (Mexico, Colombia, Peru and Chile), have chosen
to build their engagement strategy around free markets, transparency, and the
rule of law. The approach leverages
relatively strong institutions in those nations, and seeks to interact with
countries like the PRC in a fashion beneficial to member states by eliminating
impediments to the free flow of goods, capital, people, and information between
member states. The achievements of the “Pacific Alliance approach” to date include
the elimination of tariffs on 92% of trade between member countries, the
creation of common stock market between Colombia, Chile, Peru and Mexico
(“MILA”) and coordination between trade promotion activities in consulates
abroad. Future plans include greater
and more efficient flow of intellectual capital between members through programs
such as student exchanges and reciprocal acceptance of university degrees in
member nations.
The concrete advances achieved by the
Pacific Alliance in the four years since the April 2011 Lima declaration committing
to form the organization, has generated considerable enthusiasm throughout the
region and beyond. In addition to its four
members, 32 states have associated themselves with the Alliance as observers,
including Asian states Australia, New Zealand, China, Japan, and South Korea. The Alliance has also expressed an interest
in establishing relationships with other multilateral organizations, including the
Association of Southeast Asian Nations (ASEAN) and Mercosur.[5]
Yet despite its achievements, and
international interest in the organization, there are some causes for concern
regarding the organization’s continuing advance. In April 2014, Colombia’s constitutional
court ruled that the manner in which the nation had entered the Pacific
Alliance was not constitutional.[6] There has been little discussion on how the
ruling affects the nation’s current alliance membership, and while the ruling
theoretically permits Colombia to “re-join” the Alliance through
constitutionally acceptable procedures, the issue has not yet been resolved.
Beyond Colombia, Costa Rica, which seemed
to be on the fast track to move from observer to full alliance member, has not
progressed as quickly as hoped in adapting its laws and regulations, or
completing the other steps required to formalize the process.
The focus of the most recent summit of
the Pacific Alliance, in June 2014 in Punto Mita, Mexico, was developing
external ties to the Pacific, rather than deepening integration between member
states, per se.[7]
Yet it was notable that the meeting lacked announcements of significant
progress on the deepening of cooperation between members, as has been the case
in prior summits.[8]
On the other hand, candidate Pacific
Alliance member Panama has moved closer to formally joining the Alliance; in
April 2015, the country’s legislature, and that of Mexico, ratified a free
trade accord between the two, meaning that Panama now has the trade agreements
with all alliance members required to join the block.
The obstacles in the advance of the
Alliance, also include the changing internal politics of its members. The government of Michelle Bachelet in Chile,
who returned to power in March 2014, is based on a much more left-of-center
political coalition than her Concertación government during her
2006-2010 term in office. The parties in
her new coalition are arguably more reluctant to embrace what are seen as
neoliberal associations, including the Pacific Alliance and Trans-Pacific
Partnership. Complicating matters, her government has also been distracted by a
bribery scandal.[9] In Peru, the government of Ollanta Humala has
similarly been bogged down a national polemic surrounding revelations of
eavesdropping by its intelligence organization, the DINI, on politicians,
journalists, and business leaders, among others.[10]
By contrast to the Pacific Alliance, as
noted previously, the governments of ALBA, Argentina, and to an extent, Brazil,
have pursued a model of engagement with Asia that places a greater emphasis on
the role of the state, vis-Ã -vis the market.
While there is a diversity of policy orientations within this group on
engagement with Asia, a pattern may be observed regarding the orientation of
these governments that gives the state a relatively greater role than that
given by the Pacific Alliance block, in three areas: (1) protecting domestic
interests from foreign economic competition, (2) regulating and channeling
foreign investment and financing in the country, and (3) awarding public
contracts.
The regimes of ALBA and Argentina have
been particularly active in channeling Chinese credit and investment into the
country through deals in which the state plays a leading role. Since 2005, such loans to these governments
have accounted for 75% of the $119 billion lent to the region by Chinese policy
banks such as China Development Bank and China Ex-Im bank.[11] Venezuela and Ecuador have been particularly
active in securing such financing, using loans from China in state-to-state
deals to fund infrastructure projects and purchase Chinese goods, including
work on Ecuadoran hydroelectric facilities such as Coca Coda Sinclair,
Sopladora, Delsitanisagua, and Minas San Francisco, [12] as well as
the 2 million Haier appliances bought by Venezuela’s government to be sold at a
discount to the poor (largely supporters of the regime) during the run-up to
the 2012 elections. [13]
While not pursuing the populist socialist model used by Venezuela, Argentina
and Brazil have also given the state a leading role in engaging with the PRC,
including currency swaps between Argentine and Chinese banks, secured through
state-to-state negotiations in 2009 and 2014, as well as the $30 billion state-negotiated
China-Brazil currency swap of 2013.
In addition, the Brazilian and Chinese governments have negotiated
multiple loans from Chinese banks for the Brazilian state oil company Petrobras,
including a $10 billion deal in 2009, and $3.5 billion in 2015 to help rescue
the company from the liquidity crisis brought on by the deepening Petrobras
bribery scandal.[14]
In Argentina, the government of Cristina Fernandez has played a
high-profile role in negotiating with the PRC for a package for financing and
building the Jose Cepernic and Nestor Kirchner hydroelectric facilities on the
Santa Cruz River, as well as for upgrading the Belgrano-Cargas railroad system,
which the Argentine state is in the process of nationalizing. [15]
Both Argentina and Brazil, as well as Venezuela and Ecuador, have also
leveraged state control of the oil sector to negotiate access for Chinese
companies, and both have been notable in their use of tariff barriers and other
legal restrictions to protect domestic producers from competition by Chinese (and
other foreign) products.
From a Chinese perspective, despite the challenges
of dealing with the protectionism of Argentina and Brazil and the
dysfunctionality of Venezuela, the state-to-state approach to engagement has
served the PRC well in securing deals on advantageous terms for Chinese
companies, particularly in the more personality-driven,
weakly-institutionalized ALBA states. It
has allowed the PRC to leverage its strengths in coordinating the efforts of its
ministries, banks and companies to secure work commitments and market access
without the burdensome requirements of Western-style competitive bidding. It has done so, in part, through a
less-than-transparent process of providing targeted benefits to the government elites
who have administrative control or influence over the contracts and other
benefits to be given to the Chinese.[16]
In the process, such state-to-state deals
have also reinforced the political power of those Latin American leaders who
engage in them. In part, this is because
of the discretion afforded to leaders in weakly institutionalized states such
as Venezuela to guide who receives the lucrative intermediation and support
contracts surrounding the deal, and by providing a funding stream from the PRC that
frees such leaders from going to their own legislatures for funds, or to international
institutions such as the International Monetary Fund (IMF) or Inter-american Development Bank (IADB), which typically impose more invasive oversight requirements.
If the nature of “statism” pursued by
Brazil and Argentina toward the PRC is substantially different from that of the
ALBA states, it is also important to recognize that not all of the ALBA
countries have engaged with the PRC with equal fervor. The Bolivian government of Evo Morales, for
example, has been relatively reluctant to commit to major state-led deals with
the PRC, with Bolivia’s state petroleum firm YPFB maintaining Chinese firms at
the margins of the country’s gas and oil sector. Moreover, a number of projects thought to
have been earmarked for PRC-based firms, such as the $900 million Rositas
hydroelectric facility,[17] have
not been awarded to them.
Of the ALBA states, Ecuador and Nicaragua’s
relationships with China and other Asian actors arguably have the greatest
potential to shape the emerging regime of the Pacific. Not only does each have a Pacific coastline,
but each is uniquely positioned to redefine ALBA through its action or
inaction, as the political and economic collapse of the block’s former leading
member Venezuela plays itself out.
For Ecuador, the potential for such
influence derives from of President Correa’s intellectual and strategic orientation,
in combination with the relative effectiveness with which he has employed funds
from the PRC in Ecuadoran infrastructure projects.[18]
Nicaragua, for its part, despite not
having diplomatic relations with the PRC, stands poised to leverage Chinese
companies and institutions for the possible $50-$70 billion trans-continental
canal that would transform the country and the region. Beyond the money flows and associated
political leverage afforded to Nicaragua through such a waterway, the existence
of the canal and its governance, if built, would factor into the calculations
of virtually all Western Hemisphere and trans-Pacific maritime logistics going
forward.
As with the Pacific Alliance, influence
of the ALBA approach to engagement with the Pacific to shape the emerging
community of the Pacific is subject to considerable uncertainty. As noted previously, the block’s leading
member and source of funding is in a process of financial and political
implosion. Bolivia’s leader Evo Morales
has, to date, played more of a participatory, than a leadership role in ALBA,
and his ability to substantially influence the block, let alone the regime that
prevails in the Pacific, from his land-locked country is untried, at best. Ecuador’s President Correa, while astute, is
reportedly seen as arrogant by some of his peers. In Nicaragua, the trans-oceanic canal upon
which the future of the country and the Sandinista regime arguably rests, may
be on the brink of unraveling, with the Canal’s international representative,
Ronald McLean formalizing his resignation in April 2015,[19]
and with the date established by the project plan for beginning major excavation
already well past without evidence that such work will commence.[20]
In addition to the aforementioned
governments, the activities of Argentina and Brazil will also play an important
role in shaping the regime that emerges across the Pacific. Yet the posture of each is highly
uncertain. Argentina faces national
elections in October in which a victory by the opposition could reorient or
even halt major state-coordinated initiatives such as the Belgrano-Cargas
railway and the Nestor Kirchner and Jose Cepernic hydroelectric projects. In
Brazil, the Petrobras bribery scandal opens the door to significant change in
management of the oil sector, and possibly even impeachment of the current Rousseff
government, with an associated paralysis in, followed by significant changes to
the orientation of Brazil’s government.
With respect to MERCOSUR, to which
virtually all of the statist actors discussed in this work are bound, members
of the Pacific Alliance have expressed interest in greater collaboration with
the organization. Doing so would
potentially the Pacific Alliance greater leverage as it engages with the
countries of Asia, but it could also distract the alliance with inter-block
negotiations, and dilute the policy consensus that has enabled its rapid
advances to date. Nor is it clear
whether MERCOSUR can engage with the Pacific Alliance as a block. Internal differences between members recently
blocked the culmination of a free trade agreement between MERCOSUR and Europe,[21]
and the smaller states of the organization, Paraguay and Uruguay, have signaled
interest in engaging with the Pacific Alliance on their own.
At the trans-regional level, another
important battleground shaping the regime of the Pacific is the BRICS. In addition to the organization’s political
project to project itself as a spokesman for the developing world, the organization’s
new bank, announced during Chinese President Xi’s July 2014 trip to Latin
America, has the potential to reshape the system of financial governance in the
Pacific and beyond. The level of
transparency and the criteria that it applies in awarding and managing its loan
portfolio, and the manner in which it interacts with established institutions
such as the World Bank, International Monetary Fund, Inter-American Development
Bank, and Caribbean Development Bank, will be critical in determining its
impact on the regime of the trans-Pacific.
Finally, the regime that dominates the
Pacific will also be influenced by which multilateral organizations prevail in representing
the Americas as a whole. Although few of
the region’s diplomats openly acknowledge it, the region is engaged in a
superficially friendly, yet crucial struggle pitting the Organization of
American States (which has historically represented the region), against UNASUR
and CELAC, which define the region in a way that explicitly excludes the United
States and Canada.
While CELAC currently has very little
institutional capability, the PRC has chosen to abet it in this struggle by
using the organization as its principal vehicle for conducting multilateral
diplomacy with the Americas. The
China-CELAC summits, like those of FOCAC with Africa, have become vehicles for the
PRC to unveil and celebrate large region-wide investment funds, such as the
previously-mentioned $35 billion Latin America loan fund, creating the
possibility that Chinese funding could be instrumental in giving CELAC an
institutional identity that allows it, rather than the more democratic and
fully representative OAS, to become the principal mechanism for multilateral
governance in the Americas.
The Shadow of China’s Future
While the regime that prevails across the
Pacific will be shaped by Latin America to a greater extent than is commonly
acknowledged, the giant “dragon in the room”[22]
is how the current deceleration of growth in the PRC, and the political reforms,
the Communist party “rectification,” and the rest of the “anti-corruption
campaign” underway in that country play out.
First, slowing growth in the PRC may
weaken its appeal for Latin American businessmen and politicians as a lucrative
market and purchaser of the region’s commodities. Decreasing demand from the PRC will likely
further depress commodity prices, lowering net revenues received by Latin
America for their exports, thus hurting growth in those economies of the region
most dependent on commodity exports to the PRC, including both Pacific Alliance
members such as Peru and Chile, as well as ALBA members Venezuela, Ecuador and
Bolivia, and to some degree, Brazil.
In such a scenario, as commercially
viable opportunities for infrastructure, housing and other construction
projects in the PRC become more scarce, and as Chinese banks come under
pressure to offset non-performing loans in the PRC with commercially viable
ones abroad, Chinese banks, construction firms, and even manufacturers could
become more aggressive in seeking overseas markets such as in Latin America and
the Caribbean.
If, on the other hand, the Chinese
economy collapses, perhaps through a reinforcing cycle of economic hardship and
political unrest,[23]
the impact on Latin America would be very different. PRC investment in, and loans to Latin America
could decline dramatically, compounded by a fall in the value of Chinese
commodities purchased from the region, which would likely extend to the
agricultural sector. Brazil and
Argentina would be hard-hit by simultaneous decreases in the value of their
agricultural, mining, and petroleum exports.
Yet the most adverse effects would likely occur in the regimes of ALBA,
since they have come to depend on the PRC, with few other alternatives, to
finance their government programs, as well as to purchase their commodity
exports, and invest in their extraction.
Such a shock, as Venezuela teeters on the verge of collapse and the
Nicaragua Canal project falls apart, could precipitate the collapse of ALBA as
a political project and generate a fundamental reorientation of economic
ideology across the Americas on the scale of that which occurred at the end of
the Cold War.
Recommendations for
the U.S.
The United States alone cannot, and
should not try to prevent the PRC or other extra-hemispheric actors from
developing relationships with the countries of Latin America and the
Caribbean. Yet the ability to prosper in
the evolving world order of the 21st Century, for the U.S. and other
countries desiring an even playing field to prosper from the fruits of their
own efforts, requires that the system of formal and informal governance that
prevails across the Pacific is dominated by rule of law, free markets, and transparent
and fair competition. Such a regime will
prevent large states such as the PRC, with the ability to coordinate
government, commercial, and financial sectors, from exploiting that size and
coordination to gain access to the markets, technology and resources of the
other states in an unfair manner, on unbalanced terms.
The rules, and the weights of each actor
in the institutions of that trans-Pacific regime will almost certainly need to
change from the status quo to reflect changes in the size of, and relationships
between, each of the actors, but the existence of transparency, rule of law,
free markets and open commercial competition, highlighted previously, is fundamental.
While the achievement of such a
trans-Pacific regime does not depend solely, or even principally, on the United
States, it does require that the U.S. adjust its approach toward both Asia and
the Americas.
The U.S. must begin with an integrated
“Trans-Pacific” strategy that seeks synergies between its activities in, and
the dynamics of, both regions. The U.S.
must clearly articulate the values it represents, and the benefits of its
approach for the economic development, political sovereignty, human dignity,
and quality of life of those on both sides of the Pacific. While it communicates that story, it should
admit mistakes where appropriate, and modify its approach based on local conditions,
empirical successes, and its own shortcomings.
The U.S. Trans-Pacific strategy must, of
necessity, utilize a whole-of government approach, focused on strengthening
institutions in both the Americas and Asia, as well as fortifying transparent,
egalitarian, and democratic governance frameworks in both the formal and
informal spheres, for managing the issues of trade, investment, finance,
migration, knowledge flows, and environment that arise from the growing
commercial and informational ties between the regions.
As part of the emerging trans-Pacific
framework, the United States should advocate more strongly for the opening of
APEC to new members, particularly those from Latin America. Several states from the region, including
Colombia and Costa Rica, have long lobbied to join, yet have been precluded
from doing so by the moratorium that the organization has imposed on accepting
new members since 1997. Yet the United
States should also insist that its support is conditional on the commitment of new
members to free trade, transparent institutions, democracy, and the rule of
law. Supporting the incorporation of new
members into APEC in this fashion would strengthen the organization as a vehicle
for promoting a trans-Pacific regime in which all states had an equal
opportunity to prosper, while also allow the United States to help its Latin
American neighbors build constructive, market-oriented relationships across the
Pacific including, but not biased toward, the PRC.
Beyond APEC, the United States should also
prioritize the successful completion and entry into force of the Trans-Pacific
partnership. As a necessary condition, the Republican-controlled
U.S. Congress should allow the advance of free trade and rule of law to prevail
over its aversion to the current Democratic administration, granting it “fast track”
trade promotion authority, under which the Congress could not add amendments to
the final accord, but only decide whether to accept or reject it through a
single “yes-no” vote.[24]
With or without the TPP, the U.S. should also
work to strengthen bilateral trans-Pacific bonds between Asian and Latin
American states sharing U.S. values regarding democracy, rule of law and free
markets. U.S. institutions could, for
example, work with the Japanese, Korean, and Indian governments to facilitate
their investment in similarly-oriented Latin
American and Caribbean states such as Chile, Colombia, Mexico, Panama, and
Trinidad and Tobago, on the condition that the Asian companies interested in
such investments also demonstrated a
good track record of transparency and adherence to international laws and norms
on issues such as bribery, environmental compliance, and good corporate
citizenship.
The United States can also strengthen
such trans-Pacific ties among nations that share its values at the sub-national
level. The U.S. can, for example,
leverage its good reputation in University-level education by expanding
programs to study in the U.S. for students from both Latin America and
Asia. Such an initiative should include
not only technical subjects, but also business and area studies programs to
help prepare Latin American and Caribbean students to do business in, and
engage with, Asia, and to help students from Asia learn about, and prepare to
do business in Latin America and the Caribbean.
The approach should not be to “keep China
out,” of the region, nor to preserve the current institutional rules or balance
of power, but to integrate the P.R.C. and other actors into an institutional
framework that all can live with.
As it builds such ties at all levels, the
United States should also look for opportunities to work with the PRC and the
Chinese people where the interests of the two countries coincide, and where the
benefits of collaboration outweigh the costs.
Candidate areas include the maintenance of transparent, healthy
trans-Pacific financial systems and capital markets, achieving greater
efficiencies in international transportation systems and customs clearances
processes, strengthening standards for trade accounting and investment
protection, and combating trans-Pacific money laundering and organized crime.
Even as the United States facilitates
stronger ties between states sharing its values across the Pacific, it must
also strengthen its own bilateral relationships with the countries on each side. With respect to Latin America, the U.S. can
do more to give preferential access to its markets for Latin American
producers, as well as using tax breaks and other incentives to induce U.S.
based corporations to invest more in the region. A more generous U.S. immigration policy,
normalization of the status of those immigrants legally in the U.S., and work
to bring down transaction fees for remittances from the U.S. to Latin America
would similarlygo far to build goodwill toward the U.S. Reforming U.S. drug and gun control policies,
like its Cuba policy, would also do much to remove such distracting issues from
the table, enabling the country to focus its resources more fully on the
strategically critical question of the regime that prevails in the Pacific.
Finally, in both Asia and the Western
Hemisphere, the U.S. must do a far better job with strategic communications, in
selling the value of free markets, democratic governance, and the rule of law
as the approach best suited to leverage expanding trans-Pacific interactions to
bring sustainable development for all parties, as well as “follow-through,” to
ensure that the nations of the world reap and perceive the benefits from
pursuing the free market and transparent, rule of law policies, and democratic
institutions that the U.S. promotes in its public diplomacy.
At the end of the Cold War, many Latin
American and Caribbean states adopted neoliberal economic policies advocated by
the U.S., yet as it celebrated its ideological triumph and “the end of
history,” the U.S. arguably did not fully appreciate its vested interests in
ensuring that those policies also succeeded.
The U.S. failure to invest adequate time and resources to ensure that
the Washington Consensus produced development across all parts of the societies
that adopted them, with lessened inequality, corruption and abuses, gave rise
to the grievances which populist politicians such as Hugo Chavez would later
exploit to capture and consolidate power.
If the failure of the U.S., at the end of
the Cold War, to invest in the success of the nation’s adopting its model
contributed to the rise of populism and the ultimate marginalization of the
U.S. position in the Americas, the costs of inattention to the definition of
the regime that prevails across the Pacific in the 21st Century, are
far higher. It includes facing a
powerful, nuclear-armed China in a world in which the U.S. no longer possesses
the combination of international good-will, military dominance, and
institutional leverage that it enjoys today, and in which returns to capital no
longer flows principally to companies based in democratically-oriented Western
governments, and in which the dollar is no longer the principal international
reserve currency to sustain Washington’s fiscal policies. While some in Latin America, as well as in
Asia, might welcome such a possibility, it is ultimately a world in which none
will be secure in their prosperity, national sovereignty, or individual
liberty. For those on both sides of the
Pacific who share a commitment to such values, the stakes are too high not to
get it right.
[1] Prashanth Parameswaran, “TPP as Important as
Another Aircraft Carrier: US Defense Secretary,” The Diplomat, April 8,
2015,
http://thediplomat.com/2015/04/tpp-as-important-as-another-aircraft-carrier-us-defense-secretary/.
[2] See, for example, Richard Weitz, “Pivot Out,
Rebalance In,” The Diplomat, May 3, 2012, http://thediplomat.com/2012/05/pivot-out-rebalance-in/.
[3] Beyond the $35 billion fund announced in
Fortaleza, China has publicly announced that it anticipates investing $250
billion in the region in the next decade.
[4] For a more detailed discussion, see R. Evan
Ellis, “Latin America's Foreign Policy as the Region Engages in China.” Security and Defense Studies Review. Center for Hemispheric Defense Studies. Winter 2014.
[5] “The Presidents of the Pacific Alliance in New
York City,” Official Website of the Pacific Alliance, September 23, 2014, http://alianzapacifico.net/en/the-presidents-of-the-pacific-alliance-in-new-york-city/.
[6] “Gremios, en alerta por
fallo que tumbó ley de Alianza del PacÃfico,” El Tiempo, April 25, 2014,
http://www.eltiempo.com/archivo/documento/CMS-13882095.
[7] Jan MartÃnez Ahrens, “La
Alianza del PacÃfico inicia su expansión hacia los paÃses asiáticos,” El
Pais, June 20, 2014,
http://internacional.elpais.com/internacional/2014/06/20/actualidad/1403299453_596128.html.
[8] Nor, curiously, has the Alliance published any
new official communiques on its website since September 2014. Pacific Alliance. Official Website. http://alianzapacifico.net/en/2014/09/.
Accessed April 9, 2015.
[9] “Bachelet denies any idea of stepping down,
because of her family's corruption scandal,” Mercopress, April 8, 2015,
http://en.mercopress.com/2015/04/08/bachelet-denies-any-idea-of-stepping-down-because-of-her-family-s-corruption-scandal.
[10] On April 1, 2015, the Peruvian National
Assembly voted to oust the Prime Minister, Ana Jara, over the scandal.
[11] Kevin P. Gallagher and Margaret Myers,
"China-Latin America Finance Database," Inter-American Dialogue. Accessed April 10, 2014,
http://thedialogue.org/map_list.
[12] See R. Evan Ellis, China on the Ground in
Latin America: Challenges for the Chinese and Impacts on the Region. New York: Palgrave-Macmillan, 2014, pp. 29-30.
[13] “Programa Mi Casa Bien
Equipada ofrece 14 mil equipos en Los Próceres,” El Universal, August 29, 2012,
http://www.eluniversal.com.
[14] Will Connors and Luciana Magalhaes, “Brazil’s
Petrobras Obtains $3.5 Billion in Financing From China Development Bank,” The
Wall Street Journal, April 1, 2015,
http://www.wsj.com/articles/brazils-petrobras-obtains-3-5-billion-financing-from-china-development-bank-1427892756.
[15] “Cuáles son los puntos
centrales del proyecto de reestatización del servicio ferroviario,” La Nacion, April 9, 2015,
http://www.lanacion.com.ar/1782983-cuales-son-los-puntos-centrales-del-proyecto-de-reestatizacion-del-servicio-ferroviario.
[16] See, for example,
Fernando Villavicencio, Ecuador Made in China, Quito, Ecuador: Artes
Graficas Silva, 2013.
[17] “Bolivia negocia construcción de
hidroeléctrica de 1.300 millones de dólares,” La Razón, July 11, 2013,
http://www.la-razon.com.
[18] Yet China-funded projects in Ecuador have been
mired in problems as well, with delays in projects such as the Coca-Coda
Sinclair hydroelectric facility and the Refinery of the Pacific.
[19] “Ronald McLean Abaroa
Fuera de HKND Group,” La Prensa,
March 17, 2015,
http://www.laprensa.com.ni/2015/03/17/nacionales/1800380-ronald-maclean-abaroa-fuera-de-hknd-group.
[20] “Nicaragua Canal Project Description,” HKND
Group Official Website, January 5, 2015,
http://hknd-group.com/upload/pdf/20150105/Nicaragua_Canal_Project_Description_EN.pdf.
[21] “'Mercosur does not exist': Uruguay should try
a one to one deal with the Europe,” MercoPress,
February 1, 2015, http://en.mercopress.com/2015/02/01/Mercosur-does-not-exist-uruguay-should-try-a-one-to-one-deal-with-the-europe.
[22] The expression is taken from the 2008
book of the same title by Kevin Gallagher and Roberto Porzecanski (Stanford,
CA: Stanford University Press).
[23] For the most prominent exposition of the
political collapse portion of this scenario, see David Shambaugh, “The Coming
Chinese Crackup,” The Wall Street Journal, March 6, 2015, http://www.wsj.com/articles/the-coming-chinese-crack-up-1425659198.
[24] U.S. Defense Secretary Ashton Carter
recognized the critical strategic importance of the Trans-Pacific Partnership,
characterizing it as important to the rebalance to the Pacific as having
another aircraft carrier. See Prashanth
Parameswaran, “TPP as Important as Another Aircraft Carrier: US Defense
Secretary,” The Diplomat, April 8,
2015,
http://thediplomat.com/2015/04/tpp-as-important-as-another-aircraft-carrier-us-defense-secretary/.
