On August 13th, libertarian Javier Milei became the most-voted candidate in the primary elections in Argentina, with his political party La Libertad Avanza also securing the highest number of votes. In this manner, he outperformed both the Juntos coalition candidates (formed and led by former President Mauricio Macri) and Kirchnerist candidate Sergio Massa, current Minister of Economy. The far-right candidate surprised everyone by emerging victorious in an election that was anticipated to be more closely contested, securing 30 percent of the votes. This outcome was unexpected as most polls had placed him in third position. Consequently, Milei may be Argentina’s next president for the 2023-2027 term.

What would a Javier Milei presidency look like? Most of the analyses attempting to address this question refer to the candidate’s ambitious and controversial proposals. These include a profound State reform aimed at reducing public expenditure, the elimination of the Central Bank, and the dollarization of the economy, which stand out as some of his most popular ideas. Nonetheless, significantly less attention has been paid to Milei’s foreign policy views, how he sees the world, and Argentina’s position. Of course, foreign policy is seldom among the top issues on a presidential candidate’s agenda in Argentina, as well as voters’ interest. This is arguably reasonable in a country with enormous macroeconomic problems, including over 120 percent annual inflation.

Consequently, this article aims to dissect some elements embedded within Milei and some of his key team members that could offer insights into how Argentina’s foreign policy might unfold under a Milei administration. In pursuit of this goal, we will closely examine Milei’s stance towards Argentina’s most crucial international partners: the U.S. and the Western world, China and its South American partners, as well as the Mercosur trade bloc. 

The “Trump of the Pampas” and Argentina’s Main Partners

In a recent interview, Milei expressed that his key international allies would be the United States and Israel, also mentioning his intention to relocate Argentina’s embassy from Tel Aviv to Jerusalem. It’s hard not to draw parallels between this statement and the striking similarities to Jair Bolsonaro, the far-right former president of Brazil often referred to as “the Trump of the tropics.”

If that comparison holds true for Bolsonaro, a similar case could be made for Milei as the “Trump of the Pampas.” There are several resemblances between these three leaders, including their employment of populist rhetoric, their articulation of societal dissatisfaction with established politicians, and their conservative outlook on social issues. They also share the identification of socialism, currently manifested as “cultural Marxism” as their central adversary. Remarkably, the announcement regarding the embassy’s move to Jerusalem mirrors the actions of these former presidents (though it’s worth noting that Bolsonaro never successfully executed this move).

While it appears evident that Milei will strive for alignment with the West, it’s equally pertinent to acknowledge that neither Trump nor Bolsonaro currently holds power. As he navigates the international stage, Milei will encounter Western leaders who, for the most part, stand as political adversaries to them (such as Joe Biden) or, at the very least, have displayed substantial divergences. Notably, G7 leaders like French President Emmanuel Macron and Canadian Prime Minister Justin Trudeau fall into this category due to their differing perspectives.

However, according to Diana Mondino–a Senior Economic Advisor to Milei and potentially his future Minister of Foreign Relations–Argentina’s approach will be establishing friendly relations with the U.S. and all democratic nations while reconsidering connections and agreements with “autocratic” counterparts. Thereby, Milei seems to be fully aligned with what some have called ‘The Biden Doctrine,’ which identifies the contest between democracies and autocracies as the “center clash of our time.” What remains to be seen, though, is how the Biden administration would receive Javier Milei.

If this approach was implemented, it could trigger highly disruptive consequences for Argentina. This is because China plays an essential role as both a critical trading partner and a significant source of financial aid for Argentina, a country grappling with an exceedingly challenging fiscal predicament due to its International Monetary Fund (IMF) debt. Despite the stern stance Milei might take towards China, practical limitations would significantly curb his ability to execute such actions. The precarious financial situation makes the Chinese Swaps indispensable for Argentina’s survival in the midst of a severe shortage of foreign currency. Additionally, the influential agribusiness sector is unlikely to permit such measures, as China constitutes Argentina’s most paramount export market. Nonetheless, Milei could potentially succeed in creating political distance from China, such as withdrawing Argentina’s candidacy from the BRICS group.

Returning to the matter of relations with the U.S., it remains uncertain how the Biden administration would perceive Javier Milei. On the one hand, there are indications of the administration’s readiness to align with the U.S.’s crucial interests. Conversely, Milei’s strong association with Trump might complicate bilateral relations. Thus, Milei would need to strive to avoid cultivating a Bolsonaro-like dynamic with the White House.

Concerning relations with neighboring countries, Milei has not extensively commented on this matter. One might anticipate challenges in the relationship with Brazil’s president Luiz Inácio Lula da Silva, given Milei’s affinity with Bolsonaro, whose politically prominent son Eduardo recently rallied support for him after his victory. Regarding the Mercosur trade bloc, Milei had previously advocated for its dissolution a few years back, akin to Trump’s approach towards NAFTA upon assuming office. However, Mondino has conveyed a notably more moderate stance, suggesting that it should be revitalized, potentially aligning with Uruguay’s viewpoint of flexibilization. Regarding Uruguay, the libertarian candidate has expressed a measured level of criticism towards President Lacalle Pou, asserting that he is “far from being a liberal” while acknowledging him as a “genuine Keynesian.” Last but not least, Milei maintains a strong ally in Chile’s far-right candidate José Antonio Kast, who is considered one of the frontrunners for the 2025 presidential elections.

Conclusions

Only two months separate us from Argentina’s general election. Despite the brevity of this timeframe, it can feel like a lifetime in a country like Argentina. Within the week following the primary elections, the government already devalued the official Peso-to-Dollar exchange rate by nearly 18 percent, and economic prices have surged considerably since August 14. In such a complex nation, anything can transpire within 60 days.

Nevertheless, Milei’s position appears, at the very least, formidable. In a country where circumstances are likely to worsen leading up to the October general elections, he holds the advantage of symbolizing the “real” change for the nation, given his lack of prior public office. Consequently, closely monitoring his campaign and proposals will be pivotal. Foreign policy is often marginalized in such analyses, despite its significance for a country that offers numerous opportunities due to its abundance of natural resources, such as food, critical minerals, and renewable energies.

Despite the Trump-like “hawkish” narrative that Milei presents concerning foreign policy, he will face a challenging landscape that might constrain his intentions. The absence of like-minded governments in the region could potentially leave Argentina isolated within the area, at least until Chile’s 2025 elections, where Kast might emerge victorious. However, if Milei were to secure the presidency, the most pivotal geopolitical factor he would need to monitor would be the U.S. elections, particularly if Trump emerges as the GOP nominee. An ideal scenario for the international position Milei envisions for Argentina would involve him as president this year alongside a Trump win in the United States.

A Milei presidency holds the promise of ushering in substantial and disruptive changes to Argentina’s political and economic landscape. Its disruptive nature is already evident in its ability to challenge the dominance of the polarizing Juntos and Kirchnerist coalitions, which have controlled the political spectrum for the past decade. However, as we have previously explored in the context of foreign policy, it remains imperative to closely scrutinize the constraints that would shape his pursuit of the significant transformations he aims to enact.

Fernando Prats is a Senior Analyst at London Politca’s Latin America Desk. He also serves as a research and teaching assistant at Rosario National University in Argentina.

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The perceived tension between environmental sustainability and economic development lies at the heart of many domestic and international climate disputes. Brazil, the world’s sixth most populous country and the twelfth largest economy, is no exception. However, one of its “national champions,” the state-owned oil company Petrobras, can forge a path forward reconciling the two interests.

Today, Petrobras might be a confusing choice to spearhead the transition to a low-carbon economy. The company has recently been under increasing environmental scrutiny and embodies physical and transition climate risk dilemmas. Last month, the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA), the country’s environmental agency, denied Petrobras’ petition to drill at the mouth of the Amazon River. Facing only 12 years left of known oil reserves, the Brazilian oil company has appealed the decision.

The governmental back and forth generated a political crisis between the country’s political branches. The uncertainty has also cast doubt on President Luiz Inácio Lula da Silva’s promises to strengthen Brazil’s environmental record, even as he promised at a Paris climate meeting in June to reach zero deforestation in the Brazilian Amazon by 2030. In the 2015 Paris Accords, through its Nationally Determined Contributions (NDCs), Brazil committed to reducing greenhouse gas emissions by 43 percent below 2005 levels by 2030. Reports suggest Lula could increase the country’s NDC to 50 percent.

Lula has a justified sense of urgency given Brazil’s exposure to physical and transition climate risk. Adverse impacts such as droughts and water level changes could devastate the country, which relies on climate-sensitive sectors. Agribusiness represents 27.5 percent of its GDP and hydropower powers 55 percent of Brazil’s energy. However, Brazil has excellent renewable potential. The Brazilian Northeast has installed 21.03GW of energy in more than 750 wind farms. The region has more than quadrupled solar capacity in 10 years with projections doubling again by 2030.

If Lula intends to meet this more ambitious commitment while reconciling the environmental and labor-focused parts of his base, Petrobras will need to pivot from new drilling exploration to deepening its evolving initiatives to a green transition, such as evaluating possible joint ventures with Norway’s Equinor and China Energy International. Petrobras needs to move faster.

Mauricio Tolmasquim, Petrobras’ energy transition director, mentioned publicly that the company is already late for the energy transition. Petrobras moving to renewables would greatly aid the transition. According to Europar, the sector emissions went from 6.7 percent to 8.9 percent from 2005 to 2019. When assessing carbon emissions by economic sectors, energy, and heat increased the most. The second highest increase came from transport. Both are core parts of Petrobras’ activities.

Petrobras would transition at a time when international investors are increasingly bullish on renewable energy in Brazil. Solving this problem, Brazil and its energy sector stand to lead the region forward in this evolution. Such a transition, however, comes with serious risks. The company must rethink its capital investments while maintaining its social commitments, which rely on oil reserves projected to decrease quickly.

Petrobras’ 2023-2027 strategic plan aligns with recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) and seeks to increase investment in renewable energy sources such as wind and solar. However, in said plan, the company allocates just six percent (USD 4.4 billion) to low-carbon energy and 83 percent (USD 65 billion) to its oil and gas exploration endeavors. In 2012, Brazil’s Congress implemented a Royalties Law mandating Petrobras to contribute Pre-Salt exploration royalties to health and education, firmly establishing that the company has a defined role within Brazilian society.

In addition to engaging in an energy transition, Petrobras also has economic incentives to abandon business as usual. Brazil currently retains just 12 years of known oil and gas reserves, and according to data from S&P Capital IQ, Petrobras’ profitability is expected to drop 33 percent between 2022 and 2025. The price of Brent crude oil is predicted to decline by 18 percent from August 2023 to July 2028. Brazil’s oil and gas consumption growth rate is anticipated to decrease from 4.9 percent to 1.1 percent between 2023 and 2032. Therefore, Petrobras’ current and upcoming strategic plans should focus more on renewable energy, which has an upside growth potential and helps Brazil meet its Paris Agreement commitments.

Meanwhile, reports by Fitch indicate a surge of agreements with Chinese, French, and Spanish renewable energy corporations and Brazilian state-owned and private companies in the Brazilian states of Minas Gerais and Ceará. Non-hydroelectric renewable energy generation is projected to grow by 5.9 percent, beating the projection of the larger energy market, which sits at 2.5 percent.

Experts acknowledge that Petrobras has a “fundamental role” in supporting a green transition by focusing on biodiesel fuels, sharing energy infrastructure with renewables, carbon capture, and research investments in low-carbon energy. These expectations are in line with the company’s history. In the 1970s, Petrobras helped lead projects in Brazil that laid the groundwork for biofuels, such as ethanol and biodiesel. The company must take center stage in this latest transformation or risk alienating its environmentally conscious domestic and international investors that range from Brazil’s National Development Bank (BNDES) to Black Rock and Norges Bank.

Petrobras has taken significant steps. Between 2015 and 2022, the company reduced its CO2 emissions by 39 percent and issued a USD 1.25 billion green bond in 2022. This was followed by a statement from Petrobras President Jean-Paul Prates this year that renewables and wind power are company priorities—as seen in the recent creation of a new director position for energy transition and sustainability.

Yet, most of its emissions decline came from reducing power generation, while emissions from exploration and production fell only 19 percent. Petrobras would need to overhaul its strategy to cut its emissions sustainably, but leaning into the energy transition will put the company in a position to command this emerging field. In May, it proposed a revision to the strategic plan that would allocate as much as 15 percent of its capital expenditures to low-carbon projects. Petrobras should increase by raising that amount annually and incrementally to at least 40 percent by 2030. This new plan and allotment will be voted on in November.

Brazil’s government also has a role to play. Brazil’s Congress revised the Royalties Law in 2013 to provide socially oriented royalty money to non-petroleum-producing states. Combining the spirit of that revision with the need to incentivize social buy-in for the transition, Congress should again revise the law to create a new royalty category for the social distribution of royalties from green energy production.

Given Petrobras’ high profile in the energy sector with proven expertise in low-carbon emission technologies, such as hydropower and biofuel, taking the discussed steps could secure Brazil as a hemispheric leader in green energy and the decarbonization transitions. These activities will establish Petrobras as a vital energy and environmental agent and will maintain the company’s role as a contributor to social good while assisting the country in achieving its NDC commitments.

Fernanda Barbosa is a strategic consultant for SMEs and was formerly an asset manager in private equity real estate. She earned her MBA at the Bayes Business School in London, finished a specialization in Sustainable Finance at the University of Cambridge, and has her civil engineering degree from Unicamp. Fernanda is based in São Paulo, Brazil.

Steven Hyland Jr. teaches Latin American history and sustainable finance courses at Wingate University and researches capital markets and sustainability. He is also a Senior Consultant at Responsible Alpha.

Travis Knoll teaches religion, social movements, and Latin America at the University of North Carolina at Charlotte and Wingate University. He is also a Senior Consultant at Responsible Alpha.

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Russia underwent considerable political upheaval in late June 2023 as the Yevgeny Prigozhin’s Wagner Group briefly threatened President Vladimir Putin’s hold on power. While the rebellion failed, the future trajectory of Russian politics and Putin’s role suddenly looked less certain. That has implications for Russian foreign policy. In the case of Latin America, the rebellion is not likely to change Moscow’s policy direction, but it does raise questions over the long-term reliability of Russian policymakers to focus on the region, which has grown in importance since the outbreak of the Russo-Ukrainian War in February 2022. In many regards, Russian relations between Russia and Latin America are a marriage of convenience. Both sides need and want a diversified set of trade relations, share an interest in advancing some type of multipolar global order, and have a complicated relationship with the United States.

One of the central narratives in Latin American geopolitics is Russia’s return to Latin America. During the Cold War, the Soviet Union was the major rival of the United States, focusing on keeping Cuba’s Castro regime in power, providing assistance to Central America’s revolutionary movements in the late 1970s and early 1980s, and opportunistically poking at Washington’s “near abroad,” similar to Russia’s near abroad in the Eastern Europe, Caucasus, and Central Asia. When the Soviet Union collapsed in 1992, Moscow made a rapid retreat from Latin America, a transition that was particularly brutal in Cuba.  

The geopolitical landscape changed in 2007 when Putin made a sharp foreign policy turn. Speaking in Munich, Germany, he served notice that Russia was back as a great power, that U.S. global hegemony was bad, and the new world order should be multipolar. Indeed, the Russian leader accused the United States of creating a unipolar world “in which there is one master, one sovereign.” To emphasize the change in foreign policy direction, in 2008 the Russian military intervened in Georgia in a brief war to punish the small Caucasus nation for becoming too close with the West and in 2014 annexed Crimea from Ukraine as well as carved out two satrapies in eastern Ukraine.

In the face of the U.S. and European economic sanctions, Russia paid closer attention to Latin America. While Russia maintained a core set of relations with leftwing authoritarian regimes in Cuba, Nicaragua and Venezuela, it gradually broadened its trade relations with other states, including Argentina and Brazil, both of which became dependent on Russian fertilizer needed for their economically important agricultural sectors. Russia’s decision to invade Ukraine in February 2022 only heightened Latin America’s attractiveness.  

Russia also became active in Latin America seeking to cultivate a positive image while undermining U.S. interests. In this, significant resources were poured into strategic communications through media platforms such as RT and Sputnik, which cast themselves as alternative sources of information. This is part of an active campaign of using misinformation, disinformation, and propaganda to undermine the role of the United States in the region and target its regional allies. Russia’s strategic design vis-à-vis Latin America also includes the sale of weapons, providing advisors and technicians, and visits by high-level military and top policymakers.

Many of the above themes were evident during the April 2023 visit of Russia’s Foreign Minister Sergei Lavrov to the region. In Cuba, Lavrov asserted, “We cannot agree that the world should continue to live permanently according to these American ‘rules.’ Tensions are being escalated in the international arena, and the West’s attempts to dictate its will and ignore the legitimate positions of others not only persist, but are growing.” A few days after the June 2023 rebellion, Lavrov accused the West of putting “brazen pressure” on countries in Africa and Latin America to comply with measures taken against Russia over its invasion of Ukraine.

Russia’s Latin America diplomacy since its invasion of Ukraine has been relatively successful. Although most countries condemned the invasion, the majority have not followed the West in imposing economic sanctions. Russia’s growing regional role would not be possible without a relatively positive response from local governments, most of which prefer nonalignment as a means of hedging against U.S. hegemony. Moreover, many Latin American countries are uncomfortable with the idea that the international system is increasingly defined by two blocs of countries: one that is liberal democratic and rule of law-based; and the other that is authoritarian and gaining influence by state-driven economic statecraft. Russia has more recently been stressing that unlike the United States and Europe, it was never a colonial power in Latin America—a claim which has had a positive response, especially on the local left. This, of course, overlooks Russia’s own often brutal imperial history in Eastern Europe and Asia.

The economic factor is also important. Although Russia’s economic relationship with Latin America lags well behind that of the United States, Europe and China, it has been more targeted to places which need what Russia can produce, which broadly defines its relationships with Argentina and Brazil. Moreover, Russian companies, like Gazprom and Rosneft, are active in the energy sector in Cuba, Brazil, Mexico and Venezuela. Considering that many Latin American countries are struggling economically, picking a side in the West-versus-Russia competition or for that matter in the “new” Cold War between China and the U.S. would put them in a difficult position.  

Like many other countries, Russia is also pushing into Latin America’s critical metals sector. While the world was transfixed by the Wagner rebellion, Bolivia quietly announced that had granted Russia’s state-owned Rosatom an opening in its lithium sector, which could see an investment of USD 600 million in the Andean country.

Latin America’s relationship with Russia is not without complications. This was recently evident in the flap over Brazil’s President Luiz Inácio Lula da Silva’s support for a multipolar world order with more emphasis of the Global South. This, among other items, included visiting President Xi Jinping in China, advancing a peace plan for the Russo-Ukrainian War, announcing that Ukraine and Russia equally shared the blame for Russia’s invasion, advocating the dethronement of the U.S. dollar, permitting Iranian warships to stop in Brazil, and giving a well-publicized and loving embrace of Venezuela’s dictator and Russian ally Nicolás Maduro on his visit to a Latin American leaders summit in Brazil.

Sensitive to Russian inroads in Latin America and the Caribbean, the U.S. has indicated its displeasure with Latin America’s seeming ambiguity over the war and picking a side in the struggle between liberalism and autocracy. Indeed, the Biden administration’s response to Lula’s comments that suggested that the West had been “encouraging” war by arming Ukraine accused the Brazilian leader of “parroting Russian and Chinese propaganda without looking at the facts.” At the same time, the U.S. has increased its visits of top diplomats to the region, including Secretary of State Anthony Blinken’s June 2023 meeting with CARICOM leaders in Trinidad and Tobago and Ambassador to the UN Linda Thomas-Green to Brazil in May.

Although the June 2023 Wagner Group rebellion was dramatic and underscored Putin’s tenuous hold on power, Moscow will likely continue to push ahead with targeted economic engagement, aggressive propaganda, and closer ties with its regional allies, like Cuba, Nicaragua, and Venezuela. Russia will also calculate which other countries could be susceptible to strategic communication disruptions with an eye to maneuvering more pro-Russian candidates into office. Latin America remains attractive as a place to strike at the U.S. in its strategic underbelly, and how this unfolds will depend on the United States’ response. Despite efforts to be more proactive in Latin America, Washington is finding that most Latin American governments do not see their national interests served in abandoning nonalignment, preferring to keep their options open. Barring a major reversal on the battlefield in Ukraine or a successful rebellion, Russia, along with China, India, Iran, and Turkey, offers Latin America another option from the traditional choices of the U.S. and Europe.

Scott B. MacDonald is Chief Economist at Smith’s Research & Gradings, Research Fellow at Global Americans, and Founding Member of the Caribbean Policy Consortium. His latest book, The New Cold War, China and the Caribbean, was recently published by Palgrave Macmillan.

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Secretary of State Antony Blinken’s recent visit to China has once again brought attention to the increasingly complex dynamic between the two countries. While China emphasizes the importance of stable relations, the United States has expressed concerns regarding China’s actions in areas such as the Taiwan Strait, South China Sea, and East China Sea, as well as human rights. While these broader concerns are significant, it seems that the administration’s bandwidth is stretched thin. This has meant that a proactive approach is reserved for large-scale foreign policy priorities only. It is important not to overlook smaller, but still crucial, aspects of the global power struggle, for example, what is happening in the Americas. It is not enough to simply “let it be” as the Beatles would sing. While a great song, this approach is not an effective foreign policy, and the United States cannot ignore regions or issues that are not perceived as full-blown crises. While the U.S. Department of Defense (DOD) has become increasingly engaged in the hemisphere, “letting it be” has become the thrust of the U.S. foreign policy approach toward Latin America. This approach risks developing an increasingly disadvantageous environment for the United States.

The United States faces growing challenges and competitors in the Americas. Despite positive steps, the United States has not developed a holistic, strategic approach to the region. China’s rapid growth and subsequent demand have driven the region’s commodities boom. Roughly twenty years ago, China accounted for less than 2 percent of Latin America’s exports. Over the following decade, trade grew at an average annual rate of 31 percent, reaching around USD $180 billion in 2010. The growth continued, and last year, trade amounted to approximately USD $450 billion. China currently ranks as Latin America’s second-largest commercial trading partner, and there are no signs of this growth in trade slowing. It is projected that over the next 12 years, trade between Latin America and China could reach USD $700 billion.

China’s expanding presence, particularly in South America, raises concerns as China strengthens ties and influence through financial dependence, investments in critical minerals, vaccine diplomacy (especially during the COVID-19 pandemic), and cultural propaganda. By strategically increasing its involvement, China could hinder the United States’ ability to project influence in the region. Growing extra-hemispheric influence is not limited to China. For instance, Iranian President Ebrahim Raisi’s recent tour of Latin America highlighted the potential exploitation of the region by emerging global powers. This pressing issue requires the attention of the United States, as China, Russia, and Iran all pose challenges to America’s influence in Latin America.

Given Latin America’s significance in great power competition and the risks it poses to U.S. national security, clear objectives, prioritization, sustained attention, and targeted engagement are crucial. Inaction, as suggested by “Let it be,” is inadequate—the United States must prioritize its engagement. Not doing so could strengthen rival powers and lead to detrimental outcomes. To effectively manage risks and seize opportunities in Latin America, the United States must adopt a comprehensive “whole-of-government approach” (WGA), coordinating efforts across various government agencies. Mexico, due to its proximity and strategic importance, requires particular attention, risk mitigation, and contingency planning.

Despite the U.S. government’s limited approach, there have been some positive developments. The June 13 meeting between President Joseph R. Biden, Jr., and Uruguayan President Luis Lacalle Pou aimed to strengthen trade ties in the region. However, “one-off” meetings alone are insufficient to effectively counter China’s activities in the Americas. These meetings need to be accompanied by clear and substantive “next steps.” It would have been a timely action for the Biden administration to explicitly endorse the bipartisan “United States-Uruguay Economic Partnership Act” as this bill is designed to promote bilateral trade by reducing U.S. tariffs on certain Uruguayan exports and facilitating visas for trade and investment. An endorsement would have provided much-needed clarity and served as a demonstration of the administration’s commitment to economic growth in the region. This is especially important considering that the bill aligns with the principles of the Americas Partnership for Economic Prosperity (APEP), which is a priority for the Biden administration. Implementing these measures would not only solidify the partnership with Uruguay but also help address the challenges posed by China’s growing commercial influence.

The importance of the region for the United States requires a more expansive engagement from across the U.S. government. In addition to the broader WGA effort, there is a need for additional reforms to engagement, including enterprise funds, project financing, debt forbearance, and new lending. A more pragmatic, targeted, consistent, and contemporary approach is essential to provide policymakers with a diverse toolkit for advancing U.S. interests in the region. To effectively coordinate responses, a standing WGA effort should be in place, allocating adequate resources, attention, and staffing for Latin America. The United States cannot afford to simply ignore these challenges. The United States cannot simply “Let it be.”

Carl Meacham is a Managing Director at FTI Consulting, where he specializes in political risk management and government affairs. Prior to joining FTI, Mr. Meacham led PhRMA’s advocacy efforts for Latin America, Canada, and Europe. Prior he held the position of Senior Manager for Public Policy and Government Relations for Uber in South America and served as the Director of the Americas Program at the Center for Strategic & International Studies (CSIS). Mr. Meacham spent over a decade as Senator Richard Lugar’s (R-IN) senior professional staffer for Latin America on the Senate Foreign Relations Committee (SFRC). He has also worked for Senate Majority Leaders Chuck Schumer (D-NY) and Harry Reid (D-NV) and held a political appointee position in the Clinton administration at the U.S. Department of Commerce. Though born in the United States, Mr. Meacham was raised in Chile, his mother’s country of origin.

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The world is undergoing major geopolitical transformations. The rise of Asia, particularly China, has presented unprecedented challenges to the Western-centric liberal order of the postwar era. These changes have become even more apparent with the onset of a major military conflict in Ukraine, which further polarized political alliances along East-West lines. It was to be expected that these trends would provoke confusion and international analysts need to take special care in order to make sense of the complex dynamics unfolding in the world. This is particularly true when examining countries that have traditionally had less influence in the international arena, but whose fates have often depended upon their ability to navigate the challenges and opportunities presented by evolving global power trends.

Brazil is one such example. Latin America’s largest economy has recently seen its share of turbulence. In fact, after a stable period of democratic consolidation that lasted between 1985 and 2015, Brazil saw a rapid erosion in its democratic institutions. This process culminated in the 2018 election of Jair Bolsonaro, a divisive political figure whose authoritarian rhetoric and administrative mismanagement gave voice to an extreme right-wing nostalgia for Brazil’s military dictatorship. Although Bolsonaro is no longer in power and is presently battling multiple lawsuits, Brazil continues to face the challenge of rebuilding not only democratic procedures but also democratic values to ensure that democracy survives.

This task is now mainly in the hands of Luiz Inácio Lula da Silva, a former president who despite becoming a more polarizing figure in recent years, served two extremely successful terms in the early 2000s. Bringing the country together will require not only major political skills, which Lula has already demonstrated to have, but a feasible economic plan. In a global economy shaped by inflationary trends, energy shortages, and market instability, Lula’s domestic success will depend to a significant degree on his international achievements. While Bolsonaro obscured the relevance of the country in the global arena, Lula expanded Brazil’s presence in the early 2000s by enlarging the list of economic partners and diversifying strategic partnerships, particularly in the Global South. Notably, this was done without jeopardizing traditional relations with the United States or the European Union.

Since taking office, Brazil’s returning president has sought to promote a bold revival of his highly effective ‘active and assertive’ foreign policy. However, it will be much more difficult to reproduce Brazil’s achievements of twenty years ago given today’s challenging and changing world. Lula has made sure to start his international pilgrimages by visiting traditional and central partners, including neighboring nations and the United States. During his first month in office, he attended a meeting of the Community of Latin American and Caribbean Nations (CELAC) in Argentina, where he emphasized a desire to strengthen Brazil’s relations throughout Latin America. Soon after, Lula visited U.S. President Joseph R. Biden Jr. in Washington. During their meeting, both leaders professed their mutual desire to promote democracy and a more environmentally-sound developmental path—particularly in Brazil’s Amazon. Following his trip to the United States, Lula visited China with the objective of deepening trade relations and leading a peace effort for the war in Ukraine. After his visit to China, he again met with traditional Brazilian allies, including Spain, Portugal, Italy, and France.

All things considered, this “many friends” approach is not so different from what he implemented 20 years ago. Back then, Brazil was largely welcomed as a rising diplomatic force in the developing world. During a 2009 meeting, President Barack Obama made special note of Lula’s “forward-looking leadership in Latin America and throughout the world.” However, the domestic and global contexts in which Lula now operates have changed. Within this context, what was once seen as a progressive pursuit of an autonomous and assertive foreign policy is now interpreted by many in Brazil and the West as divisive, inappropriate, or even a betrayal of Brazil’s traditional alignments. These views ignore Lula’s earlier international record and lack a wider, historical perspective.

For more than a century, Brazil’s diplomatic efforts have focused on promoting multilateralism and pushing for the peaceful resolution of conflicts. While it drew closer to Western allies throughout the 20^th century, successive governments in Brazil—be they progressive, conservative, democratic, or authoritarian—pursued a policy of self-determination. Shaped by those dynamics, Brazil’s foreign policy has served the country well as an instrument of national development.

It is concerning to see that even qualified analyses about Lula’s attempt to reposition Brazil in the world tend to be biased, particularly by taking parts for the whole. Some see Lula’s visit to China and his repeated calls for peace talks in Ukraine as a sign that Lula was espousing an anti-Western approach to international affairs. This is clearly not the case. Similarly, fears that Lula may be trying to create an anti-U.S. Latin American alliance with China are unfounded. Yes, Lula gave more than advisable attention to Nicolas Maduro during a recent visit to Brasilia for a meeting of South American nations. However, this does not mean that Lula is in alignment with Venezuela, nor does it diminish the role that Lula actually played in helping calm things down following the 2002 coup attempt in that country—largely with the approval of the Bush administration. Likewise, Lula’s recent attempt to revive UNASUR does indeed face important challenges. However, that does not diminish the fact that regional collaboration—a goal pursued by Lula’s predecessor, as well—has proven to be a challenging yet promising project. The purpose of the project is to provide economic and political stability, an objective that should be worthy of U.S. support.

The Lula administration will not risk the country’s future by picking sides on rising international conflicts or disputes. Rather, the president’s main task is the reconstruction of his own country’s democracy. He will need all the help he can get—especially from Brazil’s main historical partner, the United States, who recently played an important role in providing support to the country’s democratic processes. Accurately understanding the context behind Lula’s international overtures is critical if one is to avoid previous analytical traps that are detrimental to understanding Brazil and its relations with the United States and the broader international community.

Rafael Ioris is a Professor of Latin American History and Politics at the University of Denver. He is originally from Brazil and currently resides in Denver, Colorado.

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Colombian President Gustavo Petro introduced a new element of political risk into investment decision-making for institutional investors and other funds. The myriad of social reforms the government seeks to pass—either immediately or in the medium-term, such as the pension, healthcare, and labor reforms—have made Colombia too risky for some investors. Petro’s insistence on weaning the Colombian economy off of oil and gas exploration and production has not helped either. However, while traditional investors are put off, other investors—including those with questionable practices in their home countries and with a greater appetite for risk—now see Colombia as a more attractive destination for their capital, as it can bring along high rewards.  

Much like several other middle-income and emerging economies, Colombia is increasingly becoming a recipient country of capital hailing from non-democratic countries, such as China, Turkey, Saudi Arabia, the United Arab Emirates, Vietnam, and Venezuela, among others. This is partly due to the global nature of capital investments from sovereign wealth funds, a concerted diversification strategy from some Asian and Middle Eastern countries which President Petro encouraged.  

Capital investments from these origin countries can be corrosive or constructive to the recipient country’s development, depending on the recipient country’s oversight, traceability, and supervision mechanisms. Corrosive capital is characterized by opaque capital flows that seek to disrupt recipient countries’ institutions to influence or disrupt their economic, political, or social fabric. These investments can flow to ensure access to critical minerals such as copper, lithium, gold, ferronickel, or rare earth, as well as strategic sectors like oil and gas, critical infrastructure, and digital technologies. 

There are strong incentives for countries to accept these investments. This is particularly true of Chinese investments which are often offer below-cost financing and speedy construction that may be too generous for emerging economies to ignore. Moreover, these authoritarian countries’ perceived disregard for political, integrity, or security risks makes them well-suited for investment into tricky jurisdictions where populist presidents and frequent regulatory changes make other investors increasingly skeptical. 

Recent research from Colombia Risk Analysis into investment flows and growing trade relations with authoritarian countries draws light on important vulnerabilities in Colombia’s procurement and oversight mechanisms. Improvements to these areas could mitigate the corroding potential of investment from authoritarian countries. There are three main vulnerabilities which could be mitigated without significant resources and could significantly strengthen available information about capital flows from authoritarian countries into Colombia:

1. Colombian public institutions are unprepared to properly track, monitor, and oversee foreign direct investment in general, including from authoritarian regimes. There is no single institution fully dedicated to investigating these issues. Instead, there are overlaps and gaps of information between Banco de la República, the Ministry of Finance, the Ministry of Trade, and the National Statistics Agency. There is a growing interest in making spending patterns visible and the process more participatory by engaging civil society.
2. Data asymmetry, regulatory loopholes, and excessive confidentiality generate negative outcomes. This erodes the capacity to make fact-based public policies that raise the standards for foreign investment and public procurement. These actions would incentivize accountability practices. 
3. There is a lack of knowledge and understanding about public debt, foreign capital flows, and the particular business protocols and practices of authoritarian regimes entering the Colombian market. Proper research and due diligence is often overlooked. This knowledge gap comes at a cost for the Colombian business environment.

This information would allow Colombia to understand and establish better procurement policies to more effectively identify the origin of funds and determine whether they constitute a threat to national security. Among Colombian public officials, there is generally little awareness regarding what corrosive capital is and how it affects and reflects on the wider society as a whole. It can be argued that this inadvertent ignorance has the potential to risk and lessen the effectiveness of public policies, economic growth, and positive social outcomes.  

A systemic lack of transparency can foster corruption, but civil society engagement can help increase awareness and promote co-creation efforts to promote accountability in the public and private sectors, Support from civil society can also help create mechanisms that provide proper oversight to turn inflows of capital from questionable nations and minimize the effects of corrosive capital. Investigative journals and portals already work on a limited budget in Colombia. Authorities should make it easier, not more difficult, to obtain information about how taxes are spent. These limitations are precisely what makes Colombia vulnerable to corrosive capital. Based on our research, these vulnerabilities require a comprehensive approach, but also political will, to address. This task does not lie solely within the realm of government. The private sector and civil society must establish clear guidelines for reporting and analyzing capital flows and assessing their risks or opportunities for Colombia.

President Petro has made it clear that he envisions a more prosperous and equal Colombia and that he will need foreign direct investment and capital to achieve that vision. For the government, it does not seem to make a difference whether that capital comes from authoritarian countries or institutional investors as long as projects get underway. While there is a campaign from the United States and other Western countries for recipient countries, including Colombia, not to receive Chinese investment, we believe that efforts to provide more information, strengthen institutions, ensure competitive bidding processes, and foster transparency will go further than threats or conditionalities to debt or aid. 

Sergio Guzmán is the Director of Colombia Risk Analysis, a political risk consulting firm based in Bogotá. Follow him on Twitter @SergioGuzmanE and @ColombiaRisk.

Sara Torres is the Communications Coordinator at Colombia Risk Analysis. Follow her on Twitter @saratorres_r.

Martha Aguilera is an Analyst at Colombia Risk Analysis. Follow her on Twitter @miaguilerac.

All opinions and content are solely the opinion of the authors and do not represent the viewpoints of Global Americans.

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DeLisle Worrell, Development Stabilization in Small Open Economies: Theories and Evidence from Caribbean Experience. Routledge. 2023.

Price: USD $54.95 | 442 pages

DeLisle Worrell’s Development and Stabilization in Small Economies: Theories and Evidence from Caribbean Experience is a work of love by one of the masters of Caribbean economics. Armed with a Ph.D. in Economics from McGill University, Worrell has had a long and distinguished career, including working at the International Monetary Fund (IMF), fellowships at Princeton and Yale Universities and the Peterson Institute, and a long connection to the Central Bank of Barbados—where he served as Governor from 2009 to 2017. When he is not publishing, he is a member of the Bermuda Financial Policy Council, the Bretton Woods Committee, and the College of Central Banks, Federal Reserve Bank of Philadelphia. His current work covers considerable ground on development economics of small open economies.

The main thrust of Development Stabilization in Small Open Economies “is about the implications of small size for the design, targets and implementation of macroeconomic policy, a topic which has not received the attention it deserves during the last four decades.” One of the key factors in impacting these calculations is foreign currency valuations. Worrell contends that part of the problem on the policymaking side—which extends to assessing financial assistance at multilateral lending institutions—is that models used by IMF staff and others to assess Caribbean policies “base their specifications on their experiences, which are of European and North American countries.” This includes factors such as the “dominant currency paradigm,” which encompasses the relationship between nominal exchange rate fluctuations and other nominal and real variables which depend on the currency in which prices can be rigid.

Another issue related to the currency issue faced by small open economies is that their international commerce operates, “in terminology which has become familiar in the context of small renewable energy production, on a buy all/sell all” basis.” This means that small open economies, like those in the Caribbean, face an economic landscape in which their small size and limited range of skills, resources, and productive capacity leave them with a handful of goods and services with which they can compete in international markets. As Worrell explains, “The stability of the small economy is secured by a balance between what they earn in foreign sales and prudent foreign borrowing, and what they spend on purchases from abroad. The growth of the economy depends on selling more abroad, through increased productivity and increased capacity to produce competitive products and services.”

In this context, small open economies are economically fueled by foreign currency. For example, many Caribbean economies have competitive tourist sectors and exports—such as the Dominican Republic, Jamaica, and Guyana—which earn foreign currency. This in turn helps attract foreign investment. The inward flow of external capital is converted into local currencies, which then go to public utilities, transportation, communications, banking and insurance services, and wholesale and retail activity. In turn, spending on these areas generates imports of fuels, vehicles, equipment, building materials, and consumer items. Any surpluses go into foreign reserves. In this sense, Worrell’s punchline is that, “The economy will grow only when the earnings of foreign currency increase; or when there is major foreign investment.”

Worrell adds that “Government spending on public utilities, health infrastructure or housing may be a national priority, but unless such spending is funded by borrowing from abroad it will be counterproductive, because the imports that would result from the additional activity will deplete the foreign reserves. From the point of view of both growth and stability, the conclusion that foreign currency is what animates the small open economy is inescapable.” This is something that needs to be taken into greater account in looking at small open economies from a model and policy standpoint.

Development and Stabilization in Small Open Economies is divided into four overarching sections. Section A describes the evidence on which the theory and model of Section B are founded. That evidence is not solely from the Caribbean, but is derived from 41 small open economies and considers indicators of human well-being and the changes that have occurred over the past three decades. Chapter 3 (part of Section A) includes case studies of Barbados, the economies of the Eastern Caribbean Currency Union, the Dominican Republic, Trinidad and Tobago, Belize, Cuba, Iceland, and Mauritius. The parts on Barbados, Cuba, and Mauritius are particularly insightful.

Section C expands on the practice of economic policy-making, including the skills and knowledge needed and the proper use of the tools of the discipline. Section D rounds off the book, with chapters on institutions, the global context and changes, and a technical overview of the Human Development Index.

Chapter 19, Practical Guidance for Policy Makers in Small Open Economies, is among the most useful chapters. Here, Worrell ties together the many strands he touches upon throughout the book and underscores what he believes is the need for economists and policymakers to make better use of the Human Development Index (HDI) as the measure of economic success. In many ways, this points to the simple equation that a happy and healthy population is more productive. It also points to a policy framework that improves on the collection, analysis, and timely public distribution of HDI data, “so that the public could be kept abreast of improvements that might be expected as the economic strategy unfolds.”

Another key point is that for any economic program or strategy to succeed, it must be sold to the public. As Worrell notes, “The strategy needs to be sold to the local economy on its merits, with quantitative targets and deadlines with which everyone can mark its progress; and it has to be presented to the world in an informed, analytically sound and persuasive manner.”

In 2010, Worrell gave an address to the Barbados Economic Society in which he stated, “Back in the sixties, when I began my career in economics, we were all too aware of the limitations of the discipline: it was static where the world was dynamic, it assumed competitive markets where few existed, it assumed rationality when we knew full well that economic agents were not rational (at least not by the definition economists use), the choice of first principles was always arbitrary and culture bound, economics had no way of dealing with changing tastes and technology, and much else besides.”

Some time has passed since that speech and Worrell’s book does much to address many of those issues. Worrell’s Development Stabilization in Small Open Economies is highly recommended not only for Caribbeanists, but also those interested in challenges faced by small open economies, students, and policymakers—including those in multinational organizations.

Scott B. MacDonald is Chief Economist at Smith’s Research & Gradings, Research Fellow at Global Americans, and Founding Member of the Caribbean Policy Consortium. His latest book, The New Cold War, China and the Caribbean, was recently published by Palgrave Macmillan.

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The following article is an extended version of comments presented virtually by the author, in Spanish on June 7, 2023, to a forum on the topic in Madrid, Spain, put on by the Geopolitical Observatory for Latin America (OGAL).

Since the time of the first European explorers, Latin America’s political, social, and economic dynamics have been strongly influenced by European developments. Contemporary Latin American social structures, institutions, religion, and political culture continue to bear the legacy of colonial systems. The timing and outcome of 19^th Century independence movements—including the heritage of Brazil as the host of the region’s first European empire—was shaped by Napoleon’s invasion of Europe.

However, Latin America has generally been more of an object of influence than an agent. With the exception of Brazil’s support to maritime security in the Atlantic and its contribution to efforts to liberate Italy from fascist control, Latin America remained mostly on the sidelines during World War II—even though the region was profoundly impacted by the war. During the Cold War period, Latin America became a battleground for the Soviet Union’s attempts to advance a global Communist order.

The greatly expanded connectivity of the post-Cold War world arguably strengthened the interdependence between events in Europe and Latin America, but has not significantly increased Latin American agency in the relationship. European companies expanded their presence in the region almost eight-fold during the second half of the 1990s alone. Europe has long played a role in projects and the discourse in the region on development, human rights, and the environment. For instance, Europe has increasingly become a destination for the region’s drug supply and Europe-based organizations increasingly play a role in the region’s criminal dynamics.

Today, the impact of Russia’s unprovoked invasion of Ukraine and its ongoing military activities against Ukraine’s population and infrastructure to occupy the country is consistent with the relationship Latin America has had with Europe historically. The effects flowing from that interdependence have been significant and multifaceted against a backdrop of a region-making an effort to distance itself from them.

Economic Impacts

In the economic domain, Russia’s invasion disrupted global supply chains and caused price spikes for a range of products, including fertilizers, basic foodstuffs, and fuels. The difficulties in accessing fertilizer and the food and fuel price spikes came on the heels of the COVID-19 pandemic, which not only hit the region with the highest per capita mortality rates in the world but also decimated businesses and wiped out personal savings. The pandemic also left governments with grave fiscal imbalances, impeding their ability to effectively protect their residents from the new price spikes and supply shocks. Further compounding such pressures, fertilizer shortages and price increases in the Southern Cone countries, such as Brazil and Argentina, came at the same time as record droughts which decimated crops and related earnings from agriculture.

Western sanctions on Russia, even when not fully embraced by the countries of the region, further complicated the economic picture in Latin America. Some countries lost significant export earnings. Ecuador, for instance, exported a substantial portion of its shrimp to Russia prior to the invasion. Similarly, Russia was a major purchaser of Paraguayan beef. Similarly, many armed forces across the region use a significant amount of Russian military equipment, including Mexico, Colombia, and Peru. As a result, they had difficulty servicing that equipment and keeping it operating within the international sanctions regime.

More broadly, Russia’s invasion also damaged Latin America by increasing uncertainty in financial markets. This contributed to a depressed investment environment and sustained high-interest rates in the region, as apprehension drove investors to projects and assets in developed markets perceived as less risky. Overall, Russia’s invasion of Ukraine has truncated the region’s recovery from the COVID-19 pandemic. Latin America’s GDP, which grew 5.2 percent in 2021 as the region bounced back from the pandemic, is expected to grow at a rate of only 1.3 percent in 2023.

Not all of the impact of the Russian invasion has been negative for Latin America. By contributing to the inflation of commodity prices, Russia’s war has helped bolster export earnings for select commodities in some countries. Still, such windfalls were reduced by the moderation of commodity prices caused by China’s weaker-than-expected recovery and agricultural producers, such as Brazil and Argentina, losing potentially valuable export earnings due to record drought.

Political Impacts

Beyond the explicit economic effects, Russia’s invasion has arguably contributed to a region that is less politically stable and with a weakened democratic foundation. The price shocks helped fuel protests and unrest in Peru, Panama, and Ecuador, among other countries. More broadly, the deepening of such economic stresses has helped to deepen longstanding dissatisfaction with the performance of democratic systems, already evident in the fall of 2019 with severe nationwide protests in Ecuador and Chile.

According to the polling organization Latinobarometer, the number of people in the region who agreed that democracy was the preferable form of government fell from 63 percent in 2010 to 49 percent by 2021. In the context of eroding faith in the ability of democracy to deliver, the stresses from the Ukraine invasion—on top of those from COVID-19—have while undercut the ability of democratic regimes to govern. This in turn has brought more populist leaders to power across the region and increased the risk of further turns to non-democratic alternatives in the future.

It would be an exaggeration to say that the economic, and by extension, political effects of Russia’s war played the decisive role in the December 2022 fall of Pedro Castillo in Peru, the political weakening of Guillermo Lasso in the context of the corruption scandal that forced him to invoke “Muerte Cruzada,” or the possibility that Ricardo Martinelli, just nominated by his “realizando metas” party in Panama will return to power in May 2024 as a populist leader. Yet the inflation and fiscal dilemmas fueled by Russia’s invasion have arguably been one important element in each, as well as other difficult political dynamics playing out across the region.

Despite these concerns, there are some sources of hope. In the context of a region already controlled by an unprecedented number of left-oriented regimes as well as the war’s bad publicity for anti-U.S. authoritarian leaders like Vladimir Putin and its adverse economic effects, could contribute in some cases to bringing right-oriented leaders back to power. The most significant near-term possibility is in Argentina’s October 2023 elections, where in the face of inflation of more than 100 percent and growing risks of a new fiscal default, both the Peronist President and Vice-President have said they will not run and the current front-runner, Javier Milei is a politically non-traditional libertarian.

Security Thinking and International Relations

Beyond its economic and political effects, Russia’s invasion of Ukraine has also had a significant, wide-ranging, if uneven impact on thinking about international relations in the region, particularly on security and other matters. For a Latin America which has not seen a full inter-state military conflict since the 1995 Cenepa War between Peru and Ecuador, Russia’s invasion reminded the region that armed aggression by one state against another is still possible. Thus, highlighting the persistence of the traditional role of armed forces to defend state sovereignty and its population.

The war also had a significant, if diverse, impact on thinking in the region about the character of Vladimir Putin’s regime in Russia. For states of the more “principled, democratic” left in the region—such as Gabriel Boric’s government in Chile—Putin’s invasion and associated human rights abuses made it difficult to continue the casual relations that many had maintained with Russia before the invasion.

Defying the broader trend, however, the embrace of Russia by a handful of authoritarian populist regimes in the region—including Nicolás Maduro in Venezuela, the Ortegas in Nicaragua, and Miguel Díaz-Canel in Cuba—highlighted the ongoing strategic risks that those regimes pose to the U.S. and the region. Indeed, those populists have also begun forging alliances with Russia’s allies—such as Belarus’ Alexandr Lukashenko—in an attempt to demonstrate to domestic audiences that they have not become international pariahs. Instead, they are able to cooperate, albeit in limited ways, against the liberal order. The recent agreement to send Cuban military personnel to Belarus, supposedly for training activities but possibly to fight for Russia, is the most recent illustration of this broadening collaboration between illiberal regimes in both regions.

Beyond such political dynamics, the military developments of the war have arguably impacted thinking in Latin America about military training and doctrine. Although not excessively outspoken about the conflict, Latin American militaries are following developments in Ukraine closely. They are capturing lessons about mechanized warfare, the use of drones, missiles, air defense systems, and other matters. In addition, it demonstrated Russian deficiencies in training and logistics. Indiscriminate attacks against civilian targets and power and water infrastructure and Russia’s use of its own soldiers as “cannon fodder” have arguably had a chilling effect on the receptivity to Russian doctrine across Latin America.

Despite such far-ranging impacts, and consistent with its posture historically, neither Pro-Putin regimes nor democrats in Latin America have gotten involved in the conflict in meaningful ways. With the exception of Putin’s friends—defiant Central America regimes such as Xiomara Castro in Honduras and Nayib Bukele in El Salvador, and more opportunistic actors such as Lula in Brazil—the majority of the region has generally voted to condemn Russia at the United Nations. Most Latin American states have also generally respected the international sanctions regime against Russia. Still, given the global reach of the U.S. financial system and its legal liabilities, respect for sanctions is arguably a reflection of economic self-interest and not an affirmation of the region’s condemnation of Russian aggression.

Indeed, the region has notably avoided imposing its own sanctions on Russia. Moreover, it has notably not sent military aid and has lagged behind Europe and other parts of the world in sending other forms of assistance to the Ukrainian people. Not even those countries most politically aligned with the U.S. in the region have embraced an initiative suggested by the head of U.S. Southern Command General Laura Richardson to donate their difficult-to-service Russian equipment to Ukraine and replace it with U.S. equipment. On the other hand, the new leftist regime of Luiz Inácio Lula da Silva in Brazil has criticized the U.S. for “prolonging” the war by helping Ukraine defend itself. Additionally, in the name of “peace,” Brazil welcomed Russian Foreign Minister Sergei Lavrov to the region and discussed expanded trade with the sanctioned country.

Conclusion

In the United States, I have been moved by the number of Ukrainian flags spontaneously hung by ordinary Americans in their homes in solidarity with the Ukrainian people in an otherwise deeply divided country. In Latin America, the region to which the U.S. is intimately connected by ties of geography, commerce, and family, I worry that the lessons of Ukraine about the fundamental importance of a rules-based international order and the need to sacrifice to defend its principles has been obscured by the region’s own troubles and deepened its cynicism about democracy, the protection of fundamental rights, and the rule of law.

This past week Brazil’s President Luiz Inácio Lula da Silva welcomed Venezuelan President Nicolás Maduro to Brasilia with an embrace, dismissing as a mere “narrative” the numerous outstanding criminal cases against him as well as the more than seven million Venezuelans forced to flee his regime. The same Lula criticized the West for helping Ukraine to defend itself against Russia’s invasion as “prolonging the war.” What a contrast to Lula’s iconic predecessor Getúlio Vargas, who contributed a division of Brazilian forces to the campaign to liberate Italy in 1944. It is hard to imagine Vargas criticizing Allied efforts to defend Europe against the aggression of Hitler and Mussolini.

While the economic effects of Russia’s invasion of Ukraine are grave, the truly worrisome development has been to deepen the wounds of a region whose pain from COVID-19, corruption, insecurity, and government performance has eroded the already fragile consensus on the importance of principle. The challenge ahead is to do better in making the case for why democracy and individual rights are not just eloquent words but meaningful concepts worth the price of defending. For those words to resonate, the United States must not only keep faith with Ukraine, but also with this hemisphere. It must give its people reason to believe that values can have meaning. It must show that democratic systems coupled with the location of economic value principally in the private sector, for all of its imperfections, is still the best way to generate value for a society and protect individual liberties.

Evan Ellis is a featured contributor with Global Americans and a Latin America Research Professor with the U.S. Army War College Strategic Studies Institute. The views expressed herein are strictly his own.

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As we mark World Ocean Day, El Niño raises sea surface temperatures to record-breaking heights and a novel threat looms over the ocean floor. The practice of deep-sea mining is advancing closer by the day. Multiple corporations have a vested interest in extracting rare earth minerals deposited in nodules across the ocean floor. These minerals are integral to technologies such as smartphones, electric vehicles, and wind turbines. While they have historically been sourced through land-based mining, terrestrial reserves are dwindling at a time when demand is increasing for these products. The first application to lease the seabed for exploitation is expected as early as this July. However, concerns from the scientific community have fueled stakeholder backlash, causing companies and countries alike to boycott this industry. Despite the controversy, however, there appear to be no plans to pause the pursuit of extraction.

Figure 1: Map of the Clarion-Clipperton Zone

Source: United States Geological Survey.

The deep sea is one of the most extreme, remote, and mysterious ecosystems on Earth. Once deemed lifeless, emerging research indicates that this seemingly inhospitable biome may actually host staggering levels of biodiversity. Recently, over 5,000 new species were discovered inhabiting the Clarion-Clipperton Zone (CCZ), an undersea submarine fracture zone west of Mexico, and a key target for seafloor prospecting. Still, researchers estimate that 88 to 92 percent of the species inhabiting this area remain undiscovered. Many are likely to hold immense medicinal potential. Deep-sea organisms and their esoteric biological adaptations have propelled exciting new pharmaceutical advances—treating cancers, infectious diseases, and even Alzheimer’s. Many species in these deep-sea environments do not exist anywhere else on Earth. The disturbance of one habitat could risk entire species-level extinction events.

The seafloor has never been mined before. With little to no prior experimentation, mining poses unknown risks to deep-sea ecosystems. However, researchers have predicted that the impact will be far-reaching. Machinery equipped with powerful floodlights risk blinding organisms that are adapted to sunless conditions. The noise generated by drilling into the seabed will add to the cacophony of anthropogenic sound pollution already emanating across the entire ocean. The plowing of the seabed could disrupt benthic microbial communities that play a critical role in marine nitrogen cycling—risking the productivity of surrounding waters and posing significant economic risks to Mexican and Central American fisheries. The extraction and processing of these minerals can also generate toxic sediment plumes capable of traveling vast distances across the ocean, burying coral reefs, and muddying seawater. Scientists are only just beginning to identify these risks—much less hypothesize how to mitigate them.

Figure 1: Schematic of Deep-Sea Mining

Source: National Academy of Sciences.

Given our current lack of understanding of the full impacts of deep-sea mining, proceeding with plans to mine will likely risk the existence of a myriad of deep-sea biota—rendering countless unknown organisms extinct before we have the chance to discover them. Given this risk, scientists are imploring that companies wait to mine the seabed until the resilience of the ecosystem and totality of risks are better understood. Corporations such as Google, Volkswagen, Samsung, and Volvo have pledged not to purchase or profit from minerals sourced from the seabed. Within the Western Hemisphere, Chile, Costa Rica, Ecuador, and Panama have called for a precautionary pause.

Despite this backlash, the organization in charge of regulating extraction, the International Seabed Authority (ISA), has failed to take action to halt, or even slow, this process. The ISA is an intergovernmental body tasked with the conflicting roles of regulating deep-sea mining and protecting the deep-sea ecosystem. Created in 1982 under the UN Law of the Sea (UNCLOS), the organization is in charge of managing resource extraction in all areas of the ocean floor beyond national jurisdiction. This is an area representing over 50 percent of the planet’s seabed. Despite its connection to the United Nations, the ISA is not required to abide by many of the UN policies adopted since its inception—including the recent High Seas Agreement, which enshrined the Precautionary Principle in its guidelines, cementing the preference for caution and review in situations with unknown consequences. Though designed for impartiality, the ISA has made no concessions to the concerns of the scientific community. The ISA receives a considerable USD$ 500,000 for every exploration lease they approve, raising concerns about a potential financial conflict of interest.

Many scientists are concerned by the lack of impartiality of the ISA and its leaders. When confronted with scientists’ environmental concerns, ISA Secretary-General Michael Lodge asserted, “If you spend your whole life studying the worms that live on nodules, then you get very attached to that. And I’m not sure that they really see the woods for the trees.” However, the worms that live on deep-sea nodules are unlikely to be the only organisms affected by mining—the impact will be felt across the ocean and impact the globe.

The rush to begin deep-sea mining is unjustified and dangerous. Many of the areas targeted for mining are virtually unexplored, and the consequences of mining are unknown and unpredictable. Science has a long history of underestimating biodiversity in the oceans. A just-released study, for example, finds scientists have been drastically underestimating the ocean’s microbial biodiversity and that just 99 Pacific coral reefs harbor more microbes than the entire planet. It is not too late to slow this process of degradation down and safeguard similar future ocean discoveries.

Sophia Marencik is a Conservation Policy Intern with Ocean Doctor.

David E. Guggenheim, Ph.D., is the Founder and President, Ocean Doctor.

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The Western Hemisphere is at an important inflection point. The Americas were the hardest hit region globally by the COVID-19 pandemic—both economically and in terms of cases and deaths—and the region continues to struggle in its recovery. At the same time, the region faces the ever-growing threat of climate change, persistent inequality, the destructive middle-income trap, growing disillusionment with democracy, the largest refugee crisis outside of a war zone, among numerous other challenges. Given the veritable cornucopia of threats the region faces, identifying which challenges are the most pressing and challenging is a difficult task—but a necessary one if governments across the region are to address these threats.

The Top Challenges Facing the Americas According to Global Americans’ International Advisory Council

Fortunately, Global Americans benefits from the insights of its International Advisory Council (IAC)—a diverse group of the foremost experts on hemispheric affairs from across the Americas and a variety of different professional backgrounds. When asked what they see as the greatest regional challenges, our IAC provided an impressive list of topics ranging from concerns over democratic backsliding in the region to disinformation to the implications of growing animosity between the United States and China for the region. Despite our Advisory Council’s mixed opinions on the chief threat the region faces, there were several areas of consensus on some of the greatest challenges. These included:

1. Limited Institutional Capacity

Governments across the region—both democratically-elected and those with authoritarian tendencies—are facing trouble in delivering services and on their promises to their populaces as well as even ensuring security in different parts of their countries. While several different elements lead to a lack of institutional credibility, Stephanie Junger-Moat noted that “A lack of institutional integrity is to blame for widespread lack of institutional checks and balances—this has created an environment throughout the region where political corruption is left unchecked, the rule of law is questionable and economic and social advancement are impeded. If the region cannot do better in strengthening its institutions it will be unable to embrace the needed economic, political, and social reforms necessary to promote growth and prosperity.”

The limits of government capacity in these spaces create potentially volatile situations that impact the economies of countries across the region and have political implications that can further erode future state capacity. This “limited capacity of the State to enforce its own legality creates much space for illegal activities, corruption, areas of society totally excluded from the formal functioning of institutions, and even for the emergence of populist leaders,” highlighted Flavio Dario Espinal. As one member noted, week institutions are exacerbated by other challenges facing the region, such as drug trafficking and crime. This incentives politicians in the region to develop strong institutions that lack oversight to address specific challenges—as Nayib Bukele has done in El Salvador. While this may address a specific problem, it does little to address the gaps in institutional capacity of the state and may create longer term challenges. Therefore, in order to address many of the region’s challenges, governments must first take the important step of strengthening their institutional capacity.

2. Populism and Democratic Backsliding

As Espinal underscored, the limited capacity of the state can result in the rise of populist leaders. Global Americans IAC members were deeply concerned about the rise of populist leaders—from across the political spectrum—and democratic backsliding occurring across the region. Espinal noted that in the region, “the authoritarian tradition manifests itself in different forms… and styles…” In addition to the lack of state capacity in delivering to the needs of its citizens, Espinal suggested “the dissolution or pulverization of political parties in many of our societies… [and] the fragmentation of political life, the difficulties of establishing an effective relationship between State and society, and, ultimately, the creation of conditions for the emergence of populist leaders that operate in a political vacuum.”

Populist leaders and the political vacuum surrounding them can create further challenges for the democratic functioning of a country. Indeed, Jorge Mariscal stressed, “The growing prevalence of policies that reject independent institutions and checks and balances, as well as an effort to turn back the clock on globalization, undermine democracies and polarize society.” Polarized societies further ideas of governance as a zero-sum game and limit the desire of governments to implement the governance reforms necessary to establish the institutions that can deliver to the people. This vicious cycle leads to the continuing deterioration of democracy.

IAC Charmain Tulio Vera warned that “…populism leads to unrealistic economic expectations, which can only be remotely met by fiscal expansion. The latter typically proves to be the Achille’s heel of an economy, and leads to negative economic performance from which the population at large suffers in terms of growth, opportunity, and inequality.” Indeed, Mariscal also cautioned, this deterioration and populist policies “do not result in the best allocation of national resources, so growth and income distribution… suffer.”

3. Lack of a 21^st-Century Development Strategy

As democracies decline and populist governments fund expanding budgets, the region finds itself in a new economic situation. One very different from where the regional economy was in the 1990s and the first decade of the 2000s, when, as Tulio Vera reminded, “market-oriented policies brought greater predictability to economic policy, faster growth performance, and reduced income and wealth inequality. Furthermore, globalization made adherence to such policies easier, and the benefits were quicker to achieve.”

However, governments in the region have shifted their reference, including the United States. Javier Corrales highlighted that regional development “…has been extractivist, with no real strategy to develop competitiveness.” This model has led governments to utilize natural resource windfalls to boost spending and stimulate the local economies, something which cannot be sustained when commodity prices decline. As Vera emphasized, this “stop and start aspect of policy implementation in the region makes it difficult to develop the solid economic foundations that not only build reliable economic partnerships, but which facilitate the establishment of local political institutions.”

Past economic growth and populist spending have created a volatile situation that exacerbates democratic decline and institutional decay while also creating new problems. This sentiment was expressed by Richard Feinberg, who said that “Citizens anticipate rising household incomes which over time requires sustainable economic growth that is reasonably well shared among social classes… [However, when not reached,] frustrations produce a wide range of serious problems; [including] emigration, narcotics addictions, and crime—which in turn can corrode support for national institutions and open the gates to opportunistic authoritarian leaders.”

4. Educational Limitations

Limited and unequal access to education in much of the hemisphere exacerbates these challenges. Even though there were important improvements in educational attainment across the region during the first two decades of the twenty-first century, the COVID-19 pandemic erased these gains and will continue to have long-lasting implications for educational attainment in the region as students may not return to school.

Low levels of educational attainment and education quality result in a self-perpetuating cycle that limits growth opportunities for the region as a whole. Indeed, as Jacqueline Bern de Mena informed, “…Because of the lack of quality education, people have less access to improve their income and quality of life, thus creating greater economic inequality, and in turn greater political instability.” This political instability should not come as a surprise, after all, as Richard Feinberg affirmed, because “education provides a baseline context for analyzing life’s challenges and opportunities, and for critically assessing information.”

Not only do limits to educational attainment perpetuate the other challenges the region faces, but limited educational opportunities and outcomes will result in even greater impacts further down the line. As Junger-Moat advised, the region “… needs to create societies that are better educated and able to be more competitive in today’s global workforce.” This shift will require that governments begin the necessary investments in education now as “high quality education is required to train the workforce of the future in an increasingly sophisticated technological society,” as Feinberg indicated.

5. The Lack of a Clearly Defined U.S. Policy Toward Latin America and the Caribbean

Although many of the problems discussed above are based on domestic challenges, according to many members of our IAC, waning U.S. interest has only allowed the challenges in the region to grow. As Enrique Garcia stated “Evidence shows the diminished priority given by the U.S. to Latin America and the Caribbean in view of the higher importance given to other areas of the world,” including Russia and China.

The neglect of the region, however, comes at a cost. U.S. leadership can play a profound role in the region. As Vera mentioned, “The United States has often acted as a leader and a role model—this has been expressed through its policies and initiatives towards the region. While the reception has not always been positive, and the intentions have not always been altruistic, the leadership and guidance that the United Sates has exerted has created a more predictable policy anchor for the region. Without this guidance, policy in the region seems adrift.”

The lack of coherence includes trade and integration, which the United States has long been a proponent of. Instead, as Amparo Mercader warned, “U.S. policies have become self-centered and no longer aim to foster trade and integration with the region.” Although the United States is prioritizing its competition with China, the United States still has not focused on promoting trade with Latin America and the Caribbean despite China’s growing trade with the region.

With the United States focused on other regions, as Garcia warns, we are also seeing the “…fragmentation of the LAC regional and sub-regional integration mechanisms.” The lack of regional cooperation combined with reduced U.S. leadership create a void that contributes to the inability of the Americas to address the shared challenges and to take advantage of opportunities on the horizon.

While the challenges the region faces are numerous, our International Advisory Council views those laid out in this paper as the greatest tests facing the Americas as a whole. Addressing these challenges will require a gargantuan effort and prioritizing these specific areas over other issues that become the issues du jour. Fortunately, many of these areas are interconnected. Getting these fundamental challenges in check can allow stakeholders to address some of the other challenges our IAC identified and that continue to evolve.

The Global Americans International Advisory Council (IAC) is a standing body of leading economists, political scientists, journalists, diplomats, and thought leaders in the Americas. Learn more about this group of world-class thinkers here.

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