U.S.-Mexico: Sharing Trade, Borders

The Forgotten Relationship

Jorge G. Castaneda
Foreign Affairs
May/June 2003

 

Rethinking U.S.-Latin American Ties

Free from the strategic and ideological rigidities of the Cold War, Latin America in the mid-1990s looked forward to a more realistic and constructive relationship with the United States. The first Summit of the Americas in 1994, which launched negotiations on the Free Trade Area of the Americas (FTAA), symbolized the renewal of goodwill and cooperation in the region. The summit led to a series of hemisphere-wide meetings at various levels throughout the 1990s that offered a new model for political relations between the United States and Latin America (most notably the Williamsburg and Bariloche defense ministerial meetings). This new diplomacy for the first time presumed to treat all the region’s nations (with the exception of Cuba) as equals. The summitry also sent a powerful message throughout the hemisphere by implicitly stating that the success of the entire endeavor depended on the coordinated progress of all nations in the Americas.

A sign of the times was the lessened rhetorical confrontation between most Latin American nations and their powerful northern neighbor. Some unilateral U.S. policies-such as the process of “certifying” countries’ cooperation with the U.S. drug war or the Helms-Burton legislation, which placed sanctions on any country that traded with Cuba-faced firm regional opposition. But Latin American countries felt increasingly more at ease when discussing certain issues with Washington that in the past had been highly controversial, such as democracy and human rights promotion or combating corruption. A consensus developed, stronger than at any time in the past half-century, on what constituted a common agenda for hemispheric relations and how to address it.

By the end of the last decade, however, the progress seemed to wind down. And the terrorist attacks in New York and Washington sounded the death knell of what could have become the new Bush administration’s more forward-looking, engaged, and enlightened policy toward the rest of the hemisphere. The resulting post-September 11 picture is not pretty from a Latin American point of view, although there is certainly no lack of understanding or even support throughout the Americas for the U.S. fight against terrorism. But the United States has replaced its previous, more visionary approach to relations in the western hemisphere with a total focus on security matters. This disengagement is dangerous because it undermines the progress made in recent years on economic reform and democratization. Rarely in the history of U.S.-Latin American relations have both the challenges and the opportunities for the United States been so great. It is certainly not a time for indifference.

 

Rollback

The events of September 11 preempted the Bush administration’s initial plans to employ a more open approach within the western hemisphere. Indeed, security and counterterrorism concerns quickly, and perhaps understandably at first, overshadowed any other issue. For example, one immediate casualty of the emphasis on homeland security was the initiative to create a comprehensive and long-term solution to the problem of migration flows from Mexico to the United States. Other setbacks swiftly followed. By early 2002, the Bush administration had broadened the Plan Colombia antidrug initiative to include direct anti-insurgency efforts. This decision was motivated both by a sense that any area plagued by armed instability was a potential host for terrorism and by the collapse of the Colombian peace process. The international antiterrorist campaign further led to a disengagement from the economic troubles brewing in Argentina, Uruguay, and Brazil. In particular, the U.S. Treasury Department’s inaction turned the tragedy of Argentina’s financial collapse into a painful lesson in international laissez-faire. In Venezuela, moreover, social polarization, political instability, and growing anti-American sentiment were largely ignored at the policymaking level, even if intellectual concern in Washington among officials and think tanks was acute and increasing.

But perhaps more than these country-specific crises, the main reason to worry about the redirection of U.S. attention lay in the broader patterns emerging in Latin America. First and foremost was the lack of tangible results from years of economic reform. By the turn of the new century, it had become quite clear that the structural changes implemented in virtually every Latin American economy over the past two decades had not brought about the desired results. Growth rates remained far below expectations or even previous achievements. Even Chile, for many years the only showcase of successful economic reform, had run out of steam, averaging barely three percent growth between 1999 and 2002. This situation not only discredited the reforms themselves but invited the advent of alternatives, some of which inevitably are “anti-neoliberal.”

The disappointing results, moreover, brought into question the other great regional achievement of recent times: the broad and deep consolidation of democratic rule throughout the hemisphere. Those who became familiar at the same time with open economies and open societies channeled, perhaps unavoidably, their frustrations about weak economic performance into anger at the political process. People increasingly blamed democracy for economic stagnation, or at least for failing to deliver economic growth. Consequently, governance began to falter: democratic regimes with nothing to show for their efforts found themselves increasingly impotent and isolated, blamed for everything from the impact of unpredictable weather to international economic trends to crime and corruption. The dwindling enthusiasm for economic reform and representative democracy was revealed in poll after poll and in one election after another. And, as a result, the region today faces an increasingly unpredictable future.

U.S.-Latin American relations are also mired in uncertainty. In the post-September 11 world, Latin America finds itself consigned to the periphery: it is not a global power center, but nor are its difficulties so immense as to warrant immediate U.S. concern. In many ways, the region, at least in terms of U.S. attention, has become once again an Atlantis, a lost continent. Perplexing bureaucratic conundrums-for instance, the lengthy absence of a permanent U.S. assistant secretary of state for western hemisphere affairs-and new agency priorities have left many Latin American capitals in a diplomatic vacuum. This situation has developed despite Secretary of State Colin Powell’s and National Security Adviser Condoleezza Rice’s excellent and perhaps unprecedented personal relationships with many of their colleagues in the region. On top of it all, Latin American leaders and diplomats have a nagging feeling that whenever they point out the obvious lack of U.S. attention to regional problems or bilateral agendas, their views are received in Washington with impatience and even irritation.

Indeed, as the post-September 11 world grows increasingly complex, the western hemisphere still reveals a relatively simple pattern: the reassertion of U.S. hegemony. The central question thus becomes whether the United States is willing to work with Latin America to achieve a durable framework for regional relations and how it would accomplish this. The United States can be a positive influence in the hemisphere and it can, more than ever, contribute to the successful resolution of the region’s challenges.

 

Unquiet Quartet

To better understand the challenges-and the opportunities-of Latin America today, one ought to focus on four countries: Mexico, Colombia, Argentina, and Venezuela. Their problems have diverse sources but all would benefit from vigorous U.S. engagement.

Dealing with Mexico is in many ways the most important regional task facing the Bush administration. The matter can be summed up simply: President Vicente Fox’s consolidation of Mexico’s first democratic transfer of power must be-and be seen to be-a success. There is nothing more important to the United States than a stable Mexico, and today a stable Mexico means a democratic one. And the United States has a huge role in making Mexico’s transition to democracy a success, or in contributing to its failure. The success or failure of this experiment will be judged in Mexico ultimately in the light of the country’s economic performance-which has not been impressive these past two years. But Mexicans will also judge the state of their country’s relations with the United States. They will look to see whether Presidents Fox and Bush deliver on the ambitious bilateral agenda they sketched out at their historic February 2001 meeting at Fox’s ranch in Guanajuato, Mexico. On issues of trade, drug enforcement, the border, building a North American Economic Community, energy, and, most significant, immigration, the two countries set out a bold series of goals to meet by the end of Bush’s first term, if not sooner.

Indeed, in the first eight months of their respective presidencies, Bush and Fox achieved a fundamental breakthrough on immigration. By the time of the Guanajuato meeting, both sides had identified the core policies needed to tackle undocumented migration flows from Mexico to the United States: an expanded temporary-worker program; increased transition of undocumented Mexicans already in the United States to legal status; a higher U.S. visa quota for Mexicans; enhanced border security and stronger action against migrant traffickers; and more investment in those regions of Mexico that supplied the most migrants. The speed with which both governments carried out these negotiations certainly captured the political imagination of both societies. Fox’s resounding state visit to Washington on the eve of the September 11 terrorist attacks further lifted the new initiatives and underscored both leaders’ commitment to them.

But the symmetry ends there: Fox staked much more on this partnership than Bush did. And since the Mexican president has little to show for his gamble, he has paid a high domestic political price for his willingness to bring about a sea change in Mexico’s relations with the United States and the rest of the world. Indeed, this change has been on the order of what President Carlos Salinas did with Mexico’s economy or what President Ernesto Zedillo did with the nation’s political system. Hence the centrality of immigration in the bilateral relationship today: both Bush and Fox stated dramatic goals and raised expectations enormously. The United States understandably was forced to put the issue on hold for a time. But what was initially portrayed as a brief interlude will now probably stretch through Bush’s entire first term.

It will be almost impossible to point to success in the bilateral relationship without a deal on immigration. And unless there is such a breakthrough, Fox’s six-year term in office, nearly half over, may well be seen in Mexico as an exercise in high expectations but disappointing results. To avoid a breakdown in relations, Bush must make a state visit to Mexico City this year. He should take with him sufficient progress on key issues-immigration; trade concerns relating to sugar, tuna, trucking, and the North American Free Trade Agreement’s agricultural chapter; and funding for heightened security and the expedited passage of people and cargo at the border-to show that Mexico remains a top priority for his administration. Bush must also show that he is willing to spend political capital to ensure the success of Fox’s push for true Mexican democracy. Washington may have so far missed an opportunity to present its relationship with Mexico City as a model for the rest of the hemisphere and, indeed, for the rest of the developing world-an example of how a rich and powerful neighbor and a still relatively poor and weak one can get along and contribute to each other’s success. But the window of opportunity has not been shut. In the aftermath of the current conflict with Iraq, the United States would benefit hugely by demonstrating that it can construct alliances beyond its traditional circle of friends.

Colombia is almost as important as Mexico to the United States because of the U.S. stake in that country’s fight against drug traffickers and insurgents. The problems inherent in such a conflict are manifest. The downing of a U.S.-manned intelligence flight in mid-February close to territory controlled by the Revolutionary Armed Forces of Colombia (known by its Spanish acronym, FARC) was a tragedy waiting to happen. Indeed, rather than being an isolated event, it seems to be a deliberate escalation of FARC’s war against the administration of President Alvaro Uribe and the United States. The apparent kidnapping of three U.S. intelligence officials, in the context of deadly bombings in several Colombian cities, underscores the nature of the U.S. and Colombian dilemma. On the one hand, the peace process and the “all-talk, no-fight” policy pursued by former President Andrés Pastrana ended in utter failure because of the guerrillas’ total unwillingness to negotiate. But the “all-fight, no-talk” strategy employed by Uribe has led to a predictable outcome: the FARC has unleashed a wave of terror and violence, identical to those loosed previously by the insurgents and the drug traffickers. The country, moreover, seems hardly willing to pay the price required for a military victory over the guerrillas or even for an offensive long and intense enough to force them to negotiate in good faith. Uribe’s choice is as illusory and one-sided as Pastrana’s, and U.S. support for it is equally misplaced.

Is there a solution? Perhaps, but it is not cheap, complete, or quick. The broad outline of a long-haul strategy should be built around three components. First, Uribe should fight and talk simultaneously, as guerrillas themselves have always done. He should up the ante militarily and continue to receive U.S. support in that effort, but he should also restart negotiations with the FARC and again move forward in talks with the rival National Liberation Army (ELN). Uribe should be able to count on firm and vocal backing from the Bush administration on that score as well. This cooperation should include, if necessary, direct talks between the United States and the FARC and also the ELN-something that Washington has been unwilling to do since three American anthropologists were murdered four years ago near the Darien Gap. Second, the United States should at all costs avoid direct involvement on the ground, regardless of legalistic distinctions between contractual and official personnel, or between trainers, advisers, and combatants, be they overt or covert. Doing otherwise, no matter how great the temptation, will only mire the United States in this conflict.

Finally, Washington and Bogotá should involve the rest of the hemisphere, especially Brazil and Mexico, in the Colombian peace process. These countries should act mainly, but perhaps not only, as mediators. Brazil has proved notably reluctant to participate in the Colombian crisis other than by tightening controls on its border. Brazil’s new president, Luis Inacio Lula da Silva, however, may be more forthcoming than former president Fernando Cardoso, especially if cajoled by Mexico in that direction. Other countries, not just in the region but also in Europe, could also help Colombia by isolating the FARC internationally, as Mexico did by closing down the FARC’s office in Mexico City. Governments should also investigate potential ties between the FARC and other regional players, such as Cuba. Not only would such outside involvement improve the prospects for negotiating success, but it would also provide political cover for Uribe in what can only be a bitter and bloody struggle.

The third trouble spot is Argentina. Its economic crisis, although contained, is certainly not over. And the longer-lasting consequences of the collapse of the Southern Cone economy are as yet unclear, both for Argentina and for the rest of South America. Partly for reasons of timing (when the crisis exploded the Bush administration still thought it could easily break with the precedents set by previous bailouts from the International Monetary Fund) and partly for circumstantial reasons (Republican dislike for the IMF and former treasury secretary Paul O’Neill’s perceived dislike for Argentina), Washington seemed willing to let Argentina “sink until it hit bottom,” as one Western leader put it. But neither has it sunk completely nor recovered fully from the collapse of its currency and the deep depression of its economy. As a result, U.S. support for an agreement with the IMF had to be channeled through the government of President Eduardo Duhalde. This approach ultimately translated into backing for a deal that possesses serious flaws and may not even be implemented fully by the next Argentine president, who is to be elected in late May or early June.

Thus it would seem to make more sense for the United States to fully engage Argentina and provide solid support for the new government. At the same time, Washington should urge Buenos Aires to carry out the political and institutional reforms that that nation (and for that matter, all of Latin America) desperately needs. The new president, whatever his or her political persuasion, will require a lot of help, primarily in the form of economic assistance, and the United States should make that assistance available. This support would not be a case of throwing good money after bad. Intervention costs less earlier than later, and benign neglect is not an option, as the economic spillover from Argentina to Uruguay and Paraguay and the political shock waves hitting Brazil and Bolivia have already shown.

Finally, there is Venezuela. After excessive irritation with President Hugo Chávez during the first year of the Bush administration, Washington’s attitudes toward the Venezuelan regime had shifted rather remarkably by the time of the attempted coup in April 2002. The unlikely, worst-case explanation of what happened is that the U.S. government bestowed a smile and a wink on the bungling conspirators during the crisis leading up to the coup attempt; the best and most likely rendition is that Washington displayed an almost unheard-of degree of indifference toward those events. Concern did set in after the coup started, but it was once again overtaken by distance and by growing concern with other issues (increasingly, Iraq). Only as 2002 ended did Washington concentrate again on Venezuela, as the oil workers’ strike and Chávez’s decision to hold onto power at all costs plunged the country into chaos. Secretary Powell then began to consider diplomatic options to work with the Organization of American States and its secretary-general, César Gaviria, as well as with former U.S. president Jimmy Carter. The United States agreed to join the “Group of Friends” of Venezuela created in January, which also included Mexico, Brazil, and Chile, as well as, perplexingly, Spain and Portugal. But that diplomatic effort never got off the ground, Chávez eventually broke the oil strike, and the opposition, the United States, and the rest of Latin America ended up right back where they started more than a year ago.

On the one hand, Venezuela has a democratically elected president. He may have polarized public opinion and driven the country into the ground in response to an irresponsible opposition, but he can hardly be characterized as a communist or a traditional Latin American dictator. On the other hand, the level of animosity in Venezuelan society and the magnitude of the economic collapse guarantee that the crisis will continue. Chávez will retaliate against his opponents, they will continue to plot and demonstrate against the government, and all of this will put the country’s fragile institutions to a terrible test and frighten its neighbors and friends who know that such situations never end well.

Which is perhaps why, now that tensions have slightly receded, it might be time for Washington to participate in a less formal, more realistic initiative together with Chile, Brazil, and Mexico. Such an effort should seek to place a series of compromise proposals on the table, and then use different methods to transform them into offers that neither party could refuse. The United States can, as it did in the Central American peace talks nearly 15 years ago, deliver the opposition. And the major Latin American countries might be able to convince Chávez that it is in his interest to cut a deal that is less than perfect, but that will allow him either to depart in a dignified manner or to continue to govern in a reasonably effective way. Just as some insisted that no Group of Friends would be viable without the United States, there is no way out of the Venezuelan imbroglio without American engagement. The cost of letting these wounds fester is steep: for the Venezuelan people; for neighboring countries such as Brazil and Colombia; for Mexico, now one of the largest investors in Venezuela; and for the United States, which still relies on the country for more than 15 percent of its crude oil imports.

 

Look On The Bright Side

If the preceding cases resemble a long list of brewing regional troubles, there are also a couple of bright spots in the region, where the United States has proceeded judiciously and can continue to do so with ease. Moreover, Washington with a few relatively simple steps can do much to bridge the gap with the rest of the region.

The Bush administration, and its insightful and skillful trade negotiator, Robert Zoellick, concluded a sophisticated free trade agreement with Chile in December 2002. Chile’s economic and social situation, although lacking the spectacular results of the period from 1985 to 1999, is also solid and secure. Thus, just staying the course with Santiago would be fine policy for Washington. In addition, Chile has adroitly managed its relations with the United States, engaging intelligently and effectively with it both at the UN Human Rights Commission and at the Security Council. President Ricardo Lagos is rightly considered Latin America’s elder statesman today; when he speaks on international matters, everyone in the region listens.

Brazil is the region’s other bright spot, perhaps of greater import because, in the end, size does matter. Washington dismissed ideological prejudices and played its cards right during the presidential campaign that took Lula (as the new Brazilian president is universally known) to power. The Bush administration has refrained from estranging the new government and has constructively engaged Lula’s team on a potentially divisive issue, the involvement of the Group of Friends in Venezuela. Brazil’s new leader, for his part, has chosen a wise course of avoiding confrontation with the United States and pursuing domestic policies that are acceptable to the markets and would not ultimately scare the Bush administration into being more assertive. Yet Lula has not betrayed his platform or his followers. He is implementing many of his campaign promises, his social programs are ambitious yet feasible, his team is diverse and representative, and he could well be the harbinger of the great transformation, or aggiornamento, of the Latin American left that has been so long in coming.

Washington should do everything it can to help Lula succeed. It can go beyond benevolent neutrality to actively endorsing his regime with the markets, the IMF, and the World Bank; the United States can become a cheerleader for Lula, obviously not on ideological grounds, but because he is a democratically elected leader with sound social and economic policies. The value of such an effort is the same as it would be in Mexico: contributing to a Lula success story would generate enormous benefits for Washington. The reward would be not only the stability of Brazil, something of paramount value to the region and the United States. Most important, such a policy would show that the Bush administration can work constructively with regimes that are not its ideological soul mates, but that are nonetheless willing to reach out to the United States and find common ground. Again, as in relations with Mexico, this is no small matter in the aftermath of conflict with Iraq and U.S. estrangement from the rest of the world.

That common ground is not as difficult to reach as some may think, particularly when looking at the broad problems that Latin America faces and how the United States can address them. Economic stagnation is of course the most salient one, as well as the single issue felt most directly by the region’s inhabitants. The core concern here is restarting economic expansion, at a time when regional growth rates have once again dropped to very low levels. In addition to the debacles in Argentina and Venezuela last year, Mexico and Brazil both suffered practically flat economic performances in 2002, and the prospects for 2003 are dropping daily. The United States can play a role here, both through its own economic recovery and by pushing for a more open trade agenda in the new World Trade Organization talks leading up to the ministerial meeting in Cancún, Mexico, next September. The U.S. stance in the WTO’s “Development Round” has in fact been more constructive than the European Union’s. But other U.S. steps-such as implementing huge agricultural subsidies and steel import tariffs-have deeply disturbed many in Latin America, particularly those in countries such as Argentina and Brazil, for whom agricultural or steel exports are crucial. The United States can do much more to open up its markets in these areas.

Washington can also add a new dimension to the FTAA agenda, which is partly dormant as a result of Argentine, Brazilian, and Mexican wariness. Since the third Summit of the Americas in 2001, many countries have pointed out that free trade on its own will not easily nor automatically pull up the least developed countries in the region. Accordingly, they have called for the inclusion of some type of resource-transfer mechanism for the poorest parts of the hemisphere. Again, such a step may not be ideologically palatable to the Bush administration, but it would be in the U.S. national interest. Like the equally counterintuitive announcement of gradual increases in the U.S. foreign aid budget at the Monterrey development summit in March 2002, a resource-transfer proposal would be extremely well received in Latin America and would provide a stimulus to the faltering free trade negotiations.

With respect to issues of good governance, the United States can also help solve some of Latin America’s most intractable problems. Many in the region today believe that the main obstacles to growth are neither the weakness of economic reforms (essentially the conservative view) nor the nature of the reforms themselves (the left’s perspective) but rather the poor quality of governmental institutions and corporate practices. Reforming both is perhaps the region’s greatest challenge-and last opportunity-to return to growth. These reforms require political will, resources, and a friendly international environment. They could include jettisoning Latin America’s two-centuries-old system of presidential regimes, which have never worked under truly democratic rule nor with open societies. And they could also foster a crusade to establish the rule of law throughout the region. In too many nations, human rights, property rights, due process, an efficient and accessible judicial system, and brief, nonprogrammatic constitutions are either insufficiently represented or inadequately respected. Through the World Bank, the U.S. Agency for International Development, bilateral agreements, and other regional mechanisms, Washington could contribute actively to the modernization of Latin American institutions and thus help remove the remaining obstacles to renewed economic expansion.

By doing so, the United States would also send a strong signal that it is committed to democracy in Latin America. The U.S. response to the recent Venezuelan coup attempt was not a shining moment in this regard. The potential lack of compliance with human rights considerations in current and future anti-insurgency campaigns in Colombia could be another setback. Thus the Bush administration must emphasize that its support for democracy and human rights in Latin America holds regardless of the specific regimes this policy may help or the specific obstacles this may generate with respect to other goals. This commitment is essential to U.S. credibility in the region. Moreover, the United States would firmly establish itself as an ally in building democracy, rather than a hindrance or a fickle companion that engages or disengages depending on its interests.

A final area in which the United States and Latin America could cooperate fruitfully is in the conduct of international diplomacy. For instance, Chile’s and Mexico’s role on the UN Security Council can have an important effect on U.S.-Latin American relations. Although neither voted against the United States, they clearly felt reluctant to go along with the use-of-force resolution sponsored by the American, British, and Spanish delegations. This may have generated some irritation in Washington, but the Bush administration should use this opportunity to show that friendly relations do not require unconditional support and that there are no hard feelings. Nevertheless, both Santiago and Mexico City remain committed to working with Washington to provide diplomatic leadership on important regional issues such as the Special Conference on Hemispheric Security, which will take place in Mexico City during the summer.

 

Brave New Continent

The challenges that Latin America faces today, even for a part of the world accustomed to adversity, are awesome. If those challenges are compounded by the lack of a bold, ambitious, and enlightened U.S. approach to the region, then undoubtedly they will be still more daunting. And yet the opportunities are also greater today than ever before. The Cold War is long gone. Democracy has taken hold nearly everywhere in the region, as has at least the principle of respect for human rights. Many Latin American governments, perhaps starting with Mexico, are accepting that there is no better ally for domestic change than scrutiny, commitment, and support from abroad-preferably multilateral in nature, although bilateral ties can certainly play a part.

Across the region, people now realize that market economies of one sort or another-not necessarily the “one-size-fits-all” model purveyed by the Washington Consensus-are here to stay, and that their advent is not such a bad thing. And increasingly broader swaths of Latin American societies now accept that globalization and closer ties with the United States are facts of life, and not necessarily undesirable ones. The United States, despite its sporadic bouts of parochialism and unilateralism, and its reduced attention span, has shown open-mindedness in recent times. For instance, the early Bush administration, the AFL-CIO, and Federal Reserve Board Chair Alan Greenspan all accepted in principle a new pro-migration stance toward the region. The U.S. Congress has also virtually suspended the much-loathed counterdrug certification process. So there is progress to cheer about, but clearly much more to hope for. To turn hope into reality, the entire region needs leadership, vision, and the will to achieve. Both Latin America and the United States have ample reserves of all three.

Jorge G. Castaneda served as Mexico’s Minister for Foreign Affairs from 2000 to 2003.