Geopolitical analysis. Can the LatinAmerican rift subside?

CHILE IN THE LATIN AMERICAN CONCERT 2015

By  Soledad Soza

 

INTRODUCTION

During the 90’s – when the democratic rule came to be restored in the great majority of countries in South America – regional economies became embedded in the global market to a greater or lesser degree.

Since the year 2004, Chile went on a frantic spree to implement  Foreign Trade Agreements (FTA’s) with the major economies and commercial partners of the world to diversify its economy and avoid being trapped in a single conglomerate; these FTA’s were signed in accordance with WTO’s guidelines on tariffs and barriers.  Today Chile exhibits one of the most open economies in the world; Chile is – in fact - the only country to drop tariffs and non-tariff barriers unilaterally.  Countries like Argentina have taken a less liberal and more protective local market. Chile has led the way by signing a great number of FTA’s with USA, Canada, Korea, Japan, China, among others. This has paid Chile well providing the necessary foundations to build up its financial stability and economic prestige. In this wave of democratization in Latin-America, the collapse of the Soviet Union, and neo-liberal policies implemented during the 70’s and 80’s under the Washington Consensus, democratically elected presidents in Chile have maintained the structural reforms in cold-war and have made a smooth transition to democratic rule, enabling the country  to enjoy the fruits of capital flow and steady growth.  Chile has been ranked in top positions both in the region and globally.

At a time of contestation to American power and its legacy in terms of neo-liberal policies, Latin America countries appeared to be “going left” to satisfy social demands for more effective policies in order to tackle inequality gaps (Baker and Greene, 2011). Today, Chile faces democratic challenges in the design of second-generation reforms on education, tax evasion, and a new Constitution. Even though Chile has been leading in economic figures, the country has one of the most significant income disparities in the OECD countries where Chile is a fully-fledged member. The public sphere is vibrant; there has been significant mobilization from green groups to students’ demand for free education. The new politicization of civil society in Chile (PNUD, 2015) should not strike as a surprise, for a country in transition to development (WEF, 2014) greater health and education coverage has produced the “cognitive leap” (Naim, 2015) whereby middle classes press the state to narrow the gap between elite and non-elite classes; these social demands concentrate on free and high-quality education, which is no longer seen as a commodity but as a social right. This cognitive leap in middle classes has led Chileans to develop higher expectations to fulfill their personal projects.

Even though the Latin American region has seen a widespread shift to the left in presidential voting, the ideological divide over neoliberal values versus protectionist markets still prevails.  This rift is produced by antagonistic views that make countries revise, maintain or reject the American legacy in terms of free market and capitalism. Revision of American power is also patent in regards to White House intervention in internal affairs such as the war on drugs in Bolivia, the military coups in Latin America during the Cold War and the institutions and regimes under the Washington Consensus.

Therefore we have countries “bandwagoning” (Waltz, 1975) on American power such as Chile, Colombia, Peru, and Mexico. These countries are currently aligned in the Pacific Alliance or Acuerdo del Pacífico – they share an ideological affinity to capitalism and open markets; their basic prerogative is a bilateral commercial treaty with the USA.   We also see countries “balancing” (Waltz, 1975) against USA superpower such as Bolivia, Venezuela in revisionist ALBA and in turn, Argentina and Brazil as partners in protectionist MERCOSUR (Briceño, 2013; Malamud, 2006, 2009, 2013; Riguirozzi 2010; Bernal-Meza 2004, 2006)                 

This ideological divide in regards to America´s legacy is a stepping stone in the creation of a regional bloc in a  post-Washington Consensus era.  Certainly, America acts as a catalyzer in the region. This influence is more evident than ever in America's initiative for a Cuba-deal which seems to reshape the ideological alliances seen in the region, once de-freezing is complete and Cuba starts democratic elections, revisionist ALBA will see Cuba depart from the conglomerate.   Venezuela – also a member in ALBA - is going through its worst political and economic phase with a 200% inflation rate and huge national debt.  These two countries could no longer sustain ALBA’s ideological frame as anti-American and anti-imperialist once the USA has a normal relationship with Cuba and a democratic rule is established in Venezuela. Bolivia might stand alone in its contestation to US hegemony.  Argentina is going north with right-wing President Macri as their new president after decades of populist Peronist rule. One big task Macri has just embarked on is bringing investors back, regain international confidence in fiscal austerity measures and provide the necessary mechanisms by which the international community especially the IMF can pour new financial aid to an ailing economy.

Brazil’s contestation of American power reached a peak in the making of BRICS and the role that BRIC (without the participation of South Africa) had in the WTO’s negotiations for a greater participation of emerging countries denouncing the hegemony of the Old Quaid or G-4 on voting quotas over global trade affairs.  Today the role of BRICS has been clouded by Brazil’s corruption cases involving oil company Petrobras’s money going into politicians’ campaigns.  The move to impeach Brazil’s president Dilma Yousef has politically, economically and financially paralyzed the country and eroded Brazil’s leading role in MERCOSUR and in the G-20 conglomerate where emerging countries like Brazil were pressing for more participation in global affairs.

ANALYSIS

In the wake of the hegemonic role that the U.S. played during the Cold War in the South Cone, democratic governments began to emerge with the promotion of capitalism, liberal policies and trade integration in global markets (Briceño, 2013). However, not all the countries of the South Cone were aligned in their openness to global trade. Naturally, they promoted a cooperative behavior in the wake of an increasingly globalized market but they also formed commercial and political alliances in the region.  However, in order to maintain a political and economic liaison with the Latin American countries, the United States was committed to bringing the Americas together in a mega-bloc known as the FTAA [1]   - a mega trading bloc that was rejected by Brazil and Argentina in 2003. That is the reason why the USA decided to sign separate bilateral agreements or free trade agreements (FTAs) [2]   with countries of the South Cone that would play by WTO rules.   Chile pioneered in the signature of FTA’s – Chile began by signing a deal with the USA and then with all major players across the globe opening its economy and helping diversify its economy.  

Therefore, these two distinct phenomena in the South Cone; on the one hand, signs of “bandwagoning” on American power and on the other hand sings of “balancing” [3] against the United States has been observed.  The former is namely countries which followed the neoliberal model – sponsored by the United States under the Washington Consensus - such as Chile, Peru, and Colombia for example.  The latter refers to countries that show a revisionist lens on American superpower and try to distance themselves from  its influence  and show divergent views by openly rejecting American legacy on neoliberal policies and capitalism  and by way of establishing - for example - the anti-imperialist and anti-systemic ALBA (Venezuela, Bolivia and Cuba)  [4]  or protectionist MERCOSUR (Argentina, Brazil, Uruguay) [5].

Influential leaders in the region

It would be presumptuous to deny the influence of Chavez in the formation of ALBA, but to state that Chavez influenced all decisions or the international agenda by Bolivia’s Evo Morales would be disproportionate (Albeiro 2013). Moderate decisions to nationalize the rich hydrocarbon resources in Bolivia is a clear example that Morales acts with a degree of independence from chavismo (Mayorga 2006).

At the same time, it would be also a big mistake to deny that the anti-establishment, anti-imperialist ideology that pervades ALBA is not inspired by Chavez (Albeiro 2013).  Though chavismo, indigenismo and castrismo are different ideologies diverging from American hegemony, they all converge in the balance of power with respect to USA [6]  forming alliances for security reasons against intrusive foreign policies by the White House in cold war.   These countries are not commercially linked with the USA by means of an FTA and/or have been the subject of a long history of interference by the White House on issues of drug trafficking such as in Bolivia (coca leaf), with the anti-drug campaign (DEA) and the privatization of hydrocarbons – has prompted Bolivia’s Evo Morales to vindicate oil resources by means of a Nationalization Bill to gain sovereignty over hydrocarbons.

In 2015, Bolivia was invited to be an active member of MERCOSUR, following adjustments to its domestic economy. Here constructivism provides a helpful explanation. New epistemic communities ensure that as a result of efforts made through institutionalism, the "elites are socialized", (Johnston, 2001); in this way, the incorporation of Bolivia gives empirical basis for the claim that there are learning units in the socialization of practices that bring collaboration and cooperation to a higher level.

Chile, Peru, Colombia, and Mexico in the “Alianza del Pacífico” (Pacific Alliance) are extending an invitation to other countries to participate in the bloc.  A basic condition is to celebrate an FTA with the United States in order to ensure compliance with WTO standards. 

In effect, Bernal-Meza (2004) summarizes the rift in the following words: "The level of hemispheric guidelines, factors which, from different angles of the policy, seem to be creating two axes of leadership in the region: one, led by the United States and Chile which includes Colombia, Peru and Mexico, and the other, consisting of Brazil, Venezuela and Cuba” (….) “The line split between these two axes are precisely each country's relations with the United States, in the economy and security and relations with Cuba" (p 88)

Therefore, in the South Cone there is convergence and divergence, i.e. in the wake of the Washington Consensus, some countries converge on American values such as free market and capitalism forming an alliance with America, and others, due to ideological and structural differences, diverge on those same values forming alternative alliances such as ALBA and Mercosur.  Some are commercially linked with the U.S.A. through open regionalism and play in accordance with WTO rules, and the others play an alternative role in economic cooperation; one is anti-imperialistic; the other, protectionist.  Therefore, it is fair to admit the regional divide is structural, ideological and historic (Briceño 2013; Malamud 2006, 2009, 2013; Riguirozzi 2010; Bernal-Meza 2004, 2006)

UNASUR political conglomerate should be included in regional efforts for autonomy from the US as a political alliance to solve regional conflict [7]  Recently CELAC[8] conglomerate has excluded the United States as a full member to treat exclusively the Latin American and the Caribbean issues.

According to Pearson and Rochester (2010), the conduct of external relations must be analyzed by virtue of such alliances. In ALBA, therefore, countries converge over a critical look at the American foreign policy and promote an alternative to the neoliberal model, one which is marked by economic cooperation and solidarity. Thus, on one side,  Bolivia converges with Venezuela and Cuba in ALBA and diverges from the other two regional alliances which are also present in the region such as MERCOSUR, and recently the Alianzadel Pacífico conglomerate [9], providing a three-level institutional landscape  in the South Cone that has given impetus to extensive research , some of them are optimistically highlighting the overlapping interests and other less optimistic as Malamud (2006, 2009, 2014) who concludes that by no means these three alliances can reach a level of integration due to long-standing, historic, structural and ideological fragmentation.

Institutionalism holds that in the case of Bolivia, she might be favored by multilateral organizations in the "socialization of elites": the classic example is the invitation from MERCOSUR as long as the necessary economic architecture is adjusted in Bolivia.  This learning process, once again, according to constructivists, enables the socialization of a common institutional architecture which in UNASUR hopefully might extend to government elites to share experiences and make decisions together.

This "socialization of the elites" (Johnson, 1975) would allow for the "spill-over" or transfer of democratic practices towards other public or international policy areas and/or to other states (Haas 1958; Lindberg 1963). This could be a great achievement. To see an organization like UNASUR transformed into a supra-regional entity that succeeds in upholding the democratic clause for all of its member countries; however, the institutional architecture in UNASUR is still in the process of formation and consolidation (Baroni-Rubella 2010; Riguirozzi 2010; Malamud 2006, 2009) and still remains at the intergovernmental level. This would explain why it has been so difficult to oblige Venezuela’s Maduro to grant more spaces of democracy. In other words, the pressure exerted on Venezuela from UNASUR cannot be as powerful or persuasive as it should be, because UNASUR is not a supra-regional body i.e. the socialization of elites has not been achieved due to substantive differences in local institutional architectures remaining at the stage of inter-governmental.

Therefore an inter-governmental architecture can be associated to the realistic lens (Morgenthau 1948; Mearshmeir 2003-2007); these countries continue to behave as states preoccupied to survive in anarchy in a new reconfiguration of power, either bandwagoning on American power or balancing against such power.   This classical view is complemented with the balance of threat (Stephen Walt, 1985) where countries form alliances to secure themselves against a powerful, feared threat posed by the hegemonic power of the United States.

The Bolivarian ideal in forming a South American Alliance to share the same Latin American identity should be regarded as an intervening constructivist variable and both "bandwagoning" and "balancing" (balance of power and/or balance of threat), would be the neo-realistic independent variable which complements each other in two variables to explain the phenomena we observe in the rift observed the South Cone or the way the agent interacts with the structure. By analyzing the roles that each state in the South Cone has adopted concerning their perceptions on the Washington Consensus and their position in the region, we can explain the level of differentiation observed in the various alliances (González O, 2012, p 467).   We can predict that the U.S. will continue to be a great catalyst in the geopolitics observed in South America (Bernal - Meza 2004). Therefore the constructivist lens highlighting the search for a Latin American identity in a post-Washington Consensus era is complemented by the classical realistic lens of "bandwagoning" and of "balancing".   This applies to countries commercially integrated with the United States that seek their own security by joining a powerful state,  but that at the same time exclude the United States from entering CELAC – a forum devoted to Latin American issues.

Today those countries that have bilateral agreements with the USA and are found in the Pacific Rim have just signed the mega-deal in the Transpacific Partnership (TPP). We need to recall that the TPP is a classic example of "balancing" on the part of the USA's pivot to China's rising power.  What are the implications in the "bandwagoning" versus ''balancing" phenomena we observe in the region? The TPP has provided us with an answer.  The chances for a regional mega-bloc in Latin America have been significantly diminished.  The three-level institutional architecture based on two variables to explain the rift in Latin American could be shaped into a bi-polar scenario in the region:  those in favor of the TPP and those left out by the mega-treaty.

A bi-polar scenario does not help in efforts for real integration or the attainment of a successful supra-regional bloc. What could possibly happen to ALBA when Iran has eventually achieved an agreement with the USA? Iran had supported Bolivia and Venezuela as ideological allies and partners.   What could possibly happen with Bolivia if Venezuela is in the grip of an institutional crisis of great proportion? Can UNASUR articulate the democratic clause? What could possibly happen when Cuba finally achieves a trade agreement with the U.S.A. and initiates normalization of diplomatic relations? We know that leaders acting solely on the basis of nationalism, ideologies, and identity are hard to adapt to changes in the balance of power and fall hostage to their own ideologies. An exemplary case is Venezuela and its current internal crisis. Bolivia then could be faced to play an important role in the agglutination of ALBA members, but will Bolivia lead in that respect? Or will Bolivia take a more pragmatic stance in the view of new geopolitics with Cuba? Bolivia rejects the Washington Consensus and we should not be surprised by Evo’s rhetoric used against open regionalism and neo-liberal, capitalist order.  These are considered to be a threat to a new order - built on the "ethos" of the indigenous people who for the first time seized the Bolivian state in a democratic election.  This aspect is significant.  We know that in a unipolar world, the hegemony exerted by the United States provides security but also obliges countries to orbit around its monopoly atmosphere.  

Therefore, the hegemony of the United States - as of 1945 onwards in the region - has been a factor of significant context.  After the fall of the Berlin Wall, the end of the story that predicted Fukuyama (1991) was far from true. Quite the contrary; countries of the region faced the dilemma of "reviewing" its relationship with the U.S., “securing”  or “rejecting” such relationship  (Briceño 2012; Berger 2010; Riguirozzi 2010; Bernal-Meza 2004.

Let us remember that in the first CELAC forum celebrated in February 2013, in the inaugural address in Santiago, former right-wing President of Chile Sebastián Piñera recognized that the initiative of uniting Latin America and the Caribbean countries was largely due to the vision of Chavez t[11]. Let us remember that CELAC does not include the United States as a permanent member.

CONCLUSIONS

The ideological divide or rift observed in Latin America during the post-cold war era,  and then in the post-Washington Consensus era,  is largely due to America’s legacy in the region after decades of its hegemonic power during cold war.   On one hand, the level of structural neo-liberal reforms that each country in the South Cone was subjected to during that period explains the degree of integration with global trade. Additionally,  the rift responds to ideological views on America’s power, its legacy, and values such as free market and capitalism. Therefore, some search for security by bandwagoning on America’s power; others - due to ideological differences - opt for a revision or rejection of such power in the classical balancing of threat.  Their views on the neoliberal legacy by the Washington Consensus has led to a 3-level institutional architecture in the South Cone  - with smaller pockets of integration – namely CELAC -  and larger pockets of differentiation (ALBA, MERCOSUR, Alianza del Pacífico) -  that in the light of the TPP -  might evolve into bipolarity  thus impeding any initiative for a regional bloc. UNASUR is still inter-governmental and does not provide the supra-regional architecture that is needed to align countries on the democratic rule for example on Venezuela.  However, the integration of Cuba into the world order is a sign that America’s foreign policy is positively affecting the geopolitics of the region by bringing together a revisionist country into the political game.  These are good news against the backdrop of bipolarity that the TPP might pose to the region.

References

[1] FTAA: Free Trade Area of the Americas, it failed due to the opposition from Argentina, Brazil, and Venezuela in 2003

[2] FTA: Free Trade Agreement with WTO guidelines

[3] Bandwagoning: in the neorealist theory of Kenneth Waltz, countries seek security with the most powerful country explaining the configuration of the balance of power in anarchy

[4] ALBA: consisting of Bolivia, Venezuela, and Cuba, this axis is anti-imperialist and advocates a market based on the principle of solidarity and cooperation (Briceño, 2013)

[5] MERCOSUR, led by Argentina and Brazil with Uruguay and Paraguay, they have invited Bolivia to become a member, it is a common, protectionist tariff system on beef and agricultural products, it is a hybrid and does not show the traits of  deep trade integration compelled by WTO guidelines (Briceño, 2013)

[6] Balancing: K. Waltz (1975) referred to the two processes of stabilization of anarchy, bandwagoning is to jump on the winner’s wagon, and balancing is the balance of alliances with other states to balance a pivot. Then, later, Stephen Walt (1989) would add that this balance of power was sometimes a balance of threat or terror, to counterbalance the more powerful state because of security reasons with respect to a threatening country.

[7] UNASUR: Union of countries of South America, a political forum of great weight in the Southern Cone

[8] CELAC: Conference of Latin American and the Caribbean, forum or commercial window for Exchange

[9] Pacific Alliance: made up of countries with open regionalism, international insertion with WTO guidelines and with bilateral agreements with the USA (Chile, Peru, Colombia, and Mexico) these countries have brokered negotiations to enter TPP with the United States and others in the Asia-Pacific Rim

[10]  Ph.D. specialist in security and international defense, Director of the International Relations Department at Royal Holloway, University of London, conference available on https://www.youtube.com/watch?v=gmIktY1EKmM consulted March 30, 2014, MGIMO University

[11] News Channel, 24 hours online: Moreno highlights the role that will take on Nicolas Maduro's date 07 March 2013. Available at http://www.24horas.cl/internacional/muerehugochavez/moreno-destaca-rol-de-maduro-tras-la-muerte-de-chavez-544927. Accessed 12 April 2015