HIGHLIGHTS
● Political Developments
● Economic Developments
● Focus India-LAC
Political Developments
US-LAC Relations: The Los Angeles Summit of the Americas in June was the ninth in the series that commenced in 1994. The hosts did not invite Venezuela, Cuba and Nicaragua, the “trio of tyranny”. Reaction from the region was negative. The Mexican President sent his Foreign Minister. The Bolivian, Guatemalan, Salvadoran and Honduran Presidents did not attend, citing discrimination against the “trio”. Argentina’s President Fernandez finally went, after initially claiming that, as pro-tempore president of the LAC grouping CELAC, he had to represent the views of the entire region. Fernandez in fact used the Summit podium to air his views, criticising US domination of regional bodies like the Washington-based Organisation of American States (which supported the coup in Bolivia in 2019) and Inter-American Development Bank, led for the first time by a US citizen, not a Latin American. Even Brazil’s President Bolsonaro initially hesitated, but went eventually. Bolsonaro’s bilateral meeting with Biden – a condition for his participation – was a damp squib. The event accentuated the fissures in the hemisphere, and the problematic role of helmsman sought by the US, despite Biden’s attempted gloss of regional unity and democracy.
The first summit in 1994 in Miami – attended by all 34 leaders, minus Fidel Castro of Cuba – was held in an optimistic atmosphere with the Soviet Union dissolved; democracy on the rise in LAC; left-wing leaders Hugo Chavez, Evo Morales and Rafael Correa not on the horizon; and China not yet a competitor. The heads of state committed themselves to strengthening representative democracy and hemispheric trade integration, reflecting a degree of regional consensus. At the third summit in 2001 they signed the Inter American Democratic Charter, establishing norms for consolidation of democracy in the hemisphere. By the fifth summit in Argentina in 2005, things had changed and US attempts to establish a Free Trade Area of the Americas were put to rest by left wing leaders like Chavez, Kirschner and Lula. President Obama attended the fifth summit in Trinidad in 2009 and even met Hugo Chavez, leading to speculation over revival of US engagement in the region. The eighth summit in 2018 in Peru was not even attended by President Trump.
The Los Angeles Summit agenda included an Americas Business Dialogue and a Civil Society Forum (See also declaration on migration and protection below) on the theme “Americas Partnership for Economic Prosperity”. Democracy was clearly a major concern, and perhaps the most divisive issue for some LAC participants. The Ukraine situation also threw its shadow over the event, several participants having abstained from US sponsored resolutions in the UN seeking to isolate Russia.
Colombia voted on 19 June to elect left-wing leader Gustavo Petro as the next president. He defeated the challenger, Rodolfo Hernandez, a rank outsider – who surged into the runoff after the first round on 29 May – by 700,000 votes. The victory margin: 50.5% to 47.3% was not the most convincing, but with 11 million votes (the highest of any President) and a record 58% voting, the election was historic. Federico Gutierres, representing an alliance of establishment right-wing parties was expected to be the main challenger to the favoured Petro but came in third. Labelled “Colombia’s Trump”, Hernandez’s “anti-politics” coalition capitalized on the anger of disenchanted citizens, who blame several of the ills they suffer on the traditional political class. With an almost unknown and invisible Vice-Presidential candidate, Hernandez rode on the social media app TikTok to reach out to this disenchanted and polarised voter mass. Among his campaign promises was closure of several Colombian embassies including Russia, Sweden, Turkey, Indonesia, etc.
Petro, a former guerrilla fighter with the M19 group which gave up arms in 1990, was mayor of the capital Bogota and a sitting Senator. His Humane Colombia (Colombia Humana) party is part of the coalition Historic Pact for Colombia formed in 2021. He raises the spectre of a left-wing government in a hitherto deeply conservative Colombia, and has won the presidency after two unsuccessful attempts. His statement in a recent interview that “nothing or no one in Colombia will be expropriated” if he wins has not carried complete conviction with his right-wing opponents in the Congress, where his coalition has a strength of around fifteen percent. He has also promised extensive action on the environment and de-emphasised hydrocarbons production. Recent agitations against the unpopular outgoing right-wing government of Ivan Duque have revealed deep awareness and discontent, especially among younger voters fed up with corruption, rising living costs and lower levels of social security. Petro’s choice of Ms Francia Marquez, an afro-Colombian as running mate, a public figure in her own right, also makes an important statement in a divided society where political violence and organised crime left five presidential candidates assassinated by opponents, drug traffickers or paramilitary groups in the last century.
Colombia did turn a corner this century, with strong-arm President Alvaro Uribe ensuring better law and order and foreign investment, and his successor President Juan Manuel Santos forging a peace deal with the guerrilla group FARC after five decades of civil war. Despite credible reports of state brutality, use of illicit armed groups, etc. the state managed to achieve enough progress to enable economic growth and a better standard of living. Petro has committed to peace negotiations with the remaining guerrillas – a few thousand under the principal outlying group ELN. Global challenges such as economic downturns, lower commodity prices, COVID, etc. have fuelled general dissatisfaction with conservative governments which had managed to conceal structural deficiencies under waves of prosperity. The menace of drug cartels continues to haunt successive governments. Colombia is the closest US ally in the region and the only “global partner” of NATO in the region.
In early June, Nicaragua published a decree authorising Russian troops, planes and ships to deploy to Nicaragua for purposes of training, law enforcement or emergency response. This will allow Russian troops to carry out law enforcement duties, “humanitarian aid, rescue and search missions in emergencies or natural disasters” and “exchange of experiences and training”. The Russian Foreign Ministry referred to this as a “temporary admission of foreign military personnel”, while Nicaragua clarified it would allow the presence of “forces naval and air vessels” of Venezuela, Honduras, Guatemala, the Dominican Republic, Cuba, Mexico, El Salvador and the United States! Several years ago, Russian Defence Minister Sergei Shoigu declared that Russia would establish a military base in Nicaragua. Russia’s space agency Roscosmos has a station operating in Nicaragua since April 6, 2017, with 24 Russian satellites, officially monitoring ships operating in the country, drug trafficking, natural disasters, signs of climate change, etc. Nicaragua is one of only seven countries in the world to recognize the independence of South Ossetia and Abkhazia from Georgia. Nicaraguan President Daniel Ortega also backed Russia’s annexation of Crimea and opened a consulate in that region. Ortega was one of the first heads of state to support Russian military presence on Ukrainian territory.
The BRICS Summit hosted by China in June did not admit new members, as was speculated in the media. The Summit Declaration called for “discussions among BRICS members on BRICS expansion process… the need to clarify the guiding principles, standards, criteria and procedures for this expansion process through Sherpas’ channel on the basis of full consultation and consensus.” Argentina is a candidate for admission – favoured by China – along with Indonesia, Turkey and Egypt. The expansion of the BRICS – reportedly not opposed by India in principle – would steadily create a body rivalling the G20, which is perceived by China to be dominated by the west and its allies
Venezuelan President Nicolas Maduro visited Iran (apart from Algeria and Turkey) in early June, coinciding with dates of the Summit of the Americas in Los Angeles, to which he was not invited. He and Iranian President Ebrahim Raisi signed a 20-year partnership agreement to strengthen relations. Though both are members of the oil cartel OPEC, their oil production suffers from US sanctions, as do their political relations with the west, driving them ideologically closer. A commitment to direct flights between Caracas and Teheran was reiterated. Iran has helped Venezuela during recent years, with diluents for its heavy oil, and shipments in contravention of sanctions. Iranian companies also run supermarkets and supply much-needed consumer goods to Venezuela.
Economic Developments
The Los Angeles Declaration on Migration and Protection signed by 20 countries at the Summit of the Americas made headlines for the wrong reasons. Though several countries at the Summit did not appear at the ceremony nor sign on, the document attempts to address a burning regional issue. Migration is sought to be tackled through initiatives at regularising illegal/undocumented migrants from Venezuela, Haiti, Central America, etc. in countries currently hosting them; voluntary schemes to admit more temporary labour from LAC countries; prevention of human smuggling; and financial commitments, principally by the US (approximately $400 million, apart from private sector commitments of $1.9 billion FDI in Central America). While this initiative outlines and offers solutions, it remains to be seen if it will reduce, leave alone eliminate the massive inflows of potential migrants who risk their lives trying to get into North America. It does appear, however that the US has instituted more practical measures to tackle the problem.
The Ukraine war and political stalemate in Venezuela worked in favour of the administration of President Nicolas Maduro when on 17 May the US announced it would allow Chevron to discuss future collaboration with state-owned Venezuelan oil company PDVSA. Chevron – the only US entity still operating in Venezuela – was allowed only to carry out activities related to maintenance of its investments there. The latest easing will permit increase of oil production significantly, and may be the thin end of the wedge, allowing the US to surreptitiously increase the flow of hydrocarbons choked off from Russia. President Nicolas Maduro’s visit to Iran where he signed a 20-year cooperation agreement will also consolidate this vital economic relationship.
A day earlier, the US administration had announced easing of sanctions on Cuba, lifting a $1,000-per-quarter remittance cap and allowing direct US investment for the first time since 1960. The US also will restart a family reunification program for 20,000 Cubans to move to the US each year, which the Trump administration suspended in 2017, and resume “educational” US group travel to the island that was banned in 2019.
The UN Economic Commission for Latin America & the Caribbean (ECLAC) in its latest forecast downgraded GDP growth projections for the region from the earlier 2.1 percent to 1.8 percent, citing economic disruptions caused by the conflict in Ukraine. Poverty will engulf 33 percent of the population this year, and extreme poverty 14.5 percent. Inflation in Latin America and the Caribbean, which more than doubled between the end of 2020 and the end of 2021, to 6.6%, could hit 8.1 percent in 2022, mainly on account of the Ukraine war, which has sent prices of fuel, fertilisers and food soaring.
Focus India-LAC
Indian producer of the COVID vaccine COVAXIN, Bharat Biotech, which in mid 2021 saw cancellation of an order from Brazil for 20 million doses, lost another order to Paraguay of 1 million doses. While the Brazilian case related to allegations of corruption, the Paraguayan government, which had chosen the Indian over the Chinese vaccine and imported 400,000 doses last year, announced in June they were cancelling the order because of quality related issues. Bharat Biotech announced it was suspending export of COVAXIN as an “interim and temporary measure”.
The June 2022 report of the UNCTAD revealed that, while Foreign Direct Investment into India in 2021 declined from $64 billion in 2020 to $45 billion in 2021, FDI to Brazilwent up from $28 billion to $50 billion, and to Mexico from $28 billion to $32 billion. Brazil ranks 6th globally India 7th and Mexico 10th.
The previous issues of Latin America & Caribbean Review are available here: LINK
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