Future Nostalgia: Latin America in 2021

By Dr Christopher Sabatini

Latin America’s diverse foreign relations have always been tied to its countries’ economic fortunes and the personalities in power. In the early 2000s, when the region’s economies were booming from Chinese and Indian demand for its primary products and its presidential palaces were filled with larger-than-life, globally recognized leaders—like Hugo Chávez in Venezuela, Evo Morales in Bolivia, Michelle Bachelet in Chile and Luiz Inácio Lula da Silva in Brazil—Latin America, through individual or collective efforts, looked poised to assume a larger stake in the world’s diplomatic and economic realignment.

Even before the crisis, the presidents in the region’s two largest economies, Andrés Manuel López Obrador (AMLO) of Mexico and Jair Bolsonaro of Brazil showed little interest in asserting diplomatic muscle beyond their borders.  But the impact of COVID-19 and recent elections will mean that in 2021, and for the indefinite future, Latin America’s global profile will be a shadow of what many thought it would be only 10 years ago.

Years of lower-than-expected growth and now the economic contraction brought by the COVID-19 pandemic will force governments to focus on their own domestic economies and political futures. The tumbling rates of economic growth are expected to wipe out 20 years of economic growth, development and poverty reduction. As a result, in 2021, governments from Mexico to Chile will likely also be preoccupied with rising popular dissatisfaction and potential political upheaval. 

Dr Christopher Sabatini is the Senior Research Fellow for Latin America on the US and the Americas Programme at Chatham House.

By Professor Victor Bulmer-Thomas

The pandemic hit the countries of Latin America and the Caribbean (LAC) especially hard in 2020 with falling GDP, rising unemployment, worsening income inequality and increasing indebtedness. Accelerating economic recovery and rolling out vaccination programmes will therefore be the key priority in 2021. This will require skilful negotiations by each LAC state to secure quickly the vaccines needed from those countries inside and outside the region willing to provide them rather than relying exclusively on the global delivery being organized by the World Health Organization.

At the same time, a very different early test of diplomatic skills will come in April, when the US government hosts (virtually) the Summit of the Americas. This ninth triennial gathering of all heads of state and government in the Americas (including Cuba since 2015) still has no agenda (it is set by the host), but it is very likely that the Biden administration will want to emphasise joint action on climate change. No regional government can afford to drag its heels on this issue, but the summit provides an opportunity for Latin American and Caribbean states to coordinate their responses. If successful, this might even lead to the revival of UNASUR (founded in 2008 for South American states) and CELAC (established in 2011 for LAC states) – two institutions that have failed so far to fulfil their potential as a result of political differences among the members.

Professor Victor Bulmer-Thomas is an Associate Fellow with the US and Americas Programme and was previously Director of  Chatham House (2001-06).

By Ambassador Andrés Rozental

Latin America and the Caribbean face enormous challenges heading into 2021. First and foremost is the COVID-19 pandemic which continues to ravage all countries in the region and which at the close of last year showed no signs of weakening. Access to – and distribution of – vaccines to huge numbers of people will present a logistical nightmare for governments already constrained by severe recessions and without the human or financial resources to reach all their populations in a relatively short period.

The second major challenge for almost all countries in the region is the severe crisis that has led to negative economic growth rates, severe unemployment and the disappearance of tens of thousands of micro-, small and medium-sized enterprises. This disaster will push almost 30 million additional people in the region into poverty after decades of growth in the middle classes and a reduction in levels of absolute poverty.

Governments in the region will have to focus their foreign policies on relations with the United States under the new Biden administration, the catastrophic crisis in Venezuela, the dangerous proliferation of authoritarian leadership in many of Latin America’s countries, and policies to address both the pandemic and the economic crisis.

Ambassador Andrés Rozental is a Senior Adviser at Chatham House and Founding President of the Mexican Council on Foreign Relations.

By Steven Griner

Candidate Joe Biden made clear his commitment to multilateralism and his administration is well positioned to provide leadership that has been absent in the region for the last four years. The region’s multilateral organizations, however, are hobbled by their leadership and partisan division related to the sharp focus of US policy towards Venezuela and Cuba. 

The United States remains more than $110 million in arrears to the Pan American Health Organization and the Biden administration will have to assuage Republican concerns about the organization’s use of Cuban doctors in Brazil to provide the organization what it will need to help poor countries effectively vaccinate its citizens against COVID-19.

It remains to be seen if prominent Democrats will give the benefit of the doubt to the controversial president of the Inter-American Development Bank, a former Trump advisor and Cuba hardliner. If so, the US will need to provide additional capital so that the bank can increase lending capacity from $13 billion to the estimated $20 billion to fight climate change and prop up an economy that could see 2025 per capita income less than that of 2015, according to the IMF. 

Traditionally, the Organization of American States (OAS) would serve as a neutral interlocutor for political and social unrest in the region, but its finances and credibility have been seriously weakened as the Secretary General Luis Almagro’s near-obsessive focus on Venezuela has alienated many of the body’s member states.  

The multilateral institutions of the region can play an important role as the region digs out of the pandemic and other crises – not all related to COVID-19 – but it will require that the Biden administration shift the focus to pressing issues in countries not named Venezuela or Cuba.  

Steven Griner is a specialist in political parties, formerly at the Organization of American States.

By Vanessa Rubio

Latin America needs good political leadership. Honest, transparent, responsible, effective, empathic leaders are needed more than ever to address structural problems (poverty, informality, insecurity, violence, rule of law and strong institutions) and the new challenges (coverage and quality of health services, sustainable development and inequality) in our region. We need leaders that value science, a facts-based approach for decision making, and are committed to strengthening democratic values and institutions.

This year El Salvador (February), Chile (April), Bolivia (March), Mexico (June) and Argentina (October) will have key mid-term elections, and Ecuador (February), Peru (April) and Chile, Honduras and Nicaragua (November) will hold general elections. The still-fragile democracies and the long-sought prosperity in the region will largely depend on the quality of political leadership those elections and future ones produce. Given institutional weaknesses, hyper-presidential systems, and divided congresses, political leaders have proven to be not only important in and of themselves but also essential in the effectiveness and role of other key actors – government institutions, civil society, NGOs, media, the private sector andtrade unions.

If Latin American voters in 2021 continue to be galvanized by anger and frustration derived mainly by corruption scandals and the lack of effective social policy, we might end the year with far from optimal leadership that will take us further away from the most effective, realistic solutions to our pressing problems. The decade of the 2020s can be a decade of opportunity or a lost decade.  The one that plays out will largely depend on the quality of our leadership.

Vanessa Rubio is a Professor in Practice for the School of Public Policy at the London School of Economics and Political Science. From 2016-18 she served as the Undersecretary of Finance and Public Credit in Mexico.

By Ambassador Arturo Sarukhan

For a region that has been profoundly scarred by COVID-19, a range of priorities merit attention over the course of 2021. The fundamental cleavage of the pandemic has not been between left-wing or right-wing governments, or even democratic and autocratic regimes; it has been between efficient and inefficient governments. Seeing how nations across the region respond to the economic, social and political pressure points that will be uncorked this year will be essential. Watching which governments understand that the key to addressing this issue and other challenges will be cooperating globally and regionally to solve those problems locally will be telling.

I will particularly be keeping an eye on Mexico’s foreign policymaking. First will be the strategically decisive relationship between the incoming Biden Administration and President Andrés Manuel López Obrador. López Obrador’s folly in overtly or covertly betting on Trump’s re-election and now suggesting he would offer asylum to Assange risks further alienating Democrats.

Second, there is Mexico’s two-year stint as a non-permanent member of the UN Security Council. For a country that traditionally has punched below its weight in the international arena (and with López Obrador it has not even jumped up onto the ring, as evidenced by the disastrous decision by Mexico – albeit along with most other nations in the region – to not ensure a consensus Latin American candidate for the IDB last year), tackling issues of global peace and security at the UNSC by a government that hews to maximalist and anachronistic foreign policy principles of non-intervention and national sovereignty could turn into a debacle.

Ambassador Arturo Sarukhan is the founder and president of Sarukhan + Associates and from 2007-13 served as Mexican Ambassador to the United States.

By Richard Lapper

Just as China took advantage of the 2008 financial crisis to step up its presence in Latin America, so the health and economic crisis stemming from the COVID-19 pandemic has afforded it opportunities to expand its influence. Responding to that is a huge foreign policy challenge.

While North America and European economies contracted in 2020, China's recovered quickly after its quarantine and steady expansion during the fourth quarter of the year has put upward pressure on commodity prices. China was already the biggest or second largest export market in much of South America and is now set to become more significant than ever. In the first ten months of 2020, China absorbed 33.6 per cent of Brazil's exports, up from about 28 per cent in 2019, for example.

China's investments to Latin America  – which dipped in 2018 and 2019 - have been picking up too, in areas such as energy and telecommunications. Two months ago, State Grid, the giant Chinese transmission company, which already owns a big chunk of Brazil's power networks, spent $3 billion on the acquisition of the Chilean electrical grid assets owned by Naturgy of Spain, for example.

And on the back of this hard, long-term business interest, China has been diplomatically astute in offering assistance to tackle COVID-19. China has donated medical equipment, developed vaccines, and provided finance to allow countries to buy it. It's a stance that contrasts sharply with that of the United States under Donald Trump.

None of these Chinese initiatives are selfless, of course, and governments  must be aware of some of some the reputational and transparency issues that have surrounded Chinese vaccine development. More broadly there is a danger that some Latin American countries will become dependent on what some writers are describing as a new mercantilism. Ceding strategic control over sensitive sectors such as healthcare raises risks about which developed countries are generally more aware. The region needs to wise up too. But it is possible to work productively and harmoniously with China without becoming subservient to its power.

Richard Lapper is a writer and consultant. He is currently completing a book on Brazil entitled Beef, Bible and Bullets: Brazil in the Era of Bolsonaro to be published later this year by Manchester University Press.

By Miriam Kornblith

I will be watching developments in Cuba, Nicaragua and Venezuela. Citizens of these countries have suffered for too long under the despotic rule of Castrismo, Orteguismo and Chavismo-Madurismo. Ordinary citizens, political parties, organized civil society, media, business, labour, religious associations in varying degrees in each country have attempted to restore or establish democratic standards through peaceful means, but have not succeeded. Latin America cannot claim the title of a democratic region while those regimes endure and their influence spreads.

The democratic international community in Latin America and beyond has become increasingly aware of the nefarious consequences of these regimes on their own people and the region. These regimes exchange methods on using repression, espionage and torture to thwart dissent; fuel corrupt and kleptocratic practices all over the Latin America and beyond; and facilitate the presence of malign international actors in the region, including autocratic and rogue states and international organized crime.  Their mistreatment of their people has led to massive migration and refugee crises. 

Though the international community has become more involved and attempted to influence these governments in support of democratic players, these efforts have not been sufficient either. A main priority for the region is to build solid multilateral coalitions between domestic and international players to define strategies and approaches to foster democratic transitions and establish solid and functional democracies in the autocratic countries, to end the suffering of their people and prevent their rulers from further damaging the democratic foundations of Latin America.

Miriam Kornblith is the Senior Director for Latin America and the Caribbean at the  National Endowment for Democracy.

By Dr Andrés Malamud

Latin America is not just the land of inequality but also the land of informality. The pandemic will make things worse by pushing unemployment and poverty rates up and provoking a landslide of bankruptcies all over the region.

Informal markets, many of them illegal, will provide the only means for many individuals to subsist. In a region already characterized by criminal violence, which is home to 35 per cent of the world homicides with just 8 per cent of the world population, criminal networks will grow stronger. The arguments about ‘a bigger state’ coming out of the pandemic are only half true: states might become bigger vis-à-vis legal markets, but smaller – and weaker – vis-à-vis illegal markets.

As practices such as drug and human trafficking, corruption and smuggling increase their regional scale, interstate coordination will become indispensable to tackle them. An upsurge of illicit flows will demand an upgrade of regional governance, but the demise of UNASUR has left the region devoid of working institutional mechanisms to resolve disputes and coordinate regional policies.

Regional powers will need to learn again how to work together, as threats to state survival will no longer come from existing states, but from collapsing ones. Talking integration will not do the trick, whereas practicing cooperation just might.

Dr Andrés Malamud is a Senior Research Fellow at the  Institute of Social Sciences, University of Lisbon.

By Melissa MacEwen

In a year where 35 million people are estimated to fall into poverty or extreme poverty, recovery and resilience in the face of the ongoing COVID-19 pandemic are understandably top on the agenda; but the threats of climate change, biodiversity loss and pollution follow close behind and solutions to both are tightly intertwined.

With mining resources central to the global decarbonization agenda, 22 per cent of the world’s forests and as the world’s largest net food exporter and supplier of ecosystem services, the region can and should look to a green, inclusive economic recovery to bring benefits for both people and the planet. The upcoming XXII Meeting of the Forum of Ministers of Environment of Latin America and the Caribbean, due to take place later in January, will cover the most pressing environmental issues in the region in this context. Leaders should look to direct COVID-19 recovery and UN Sustainable Development Goal financing and capacity building to places where that support and institutions can offer synergies.

Examples where this can be applied include developing a sustainable bioeconomy that preserves forests and biodiversity while building on the region’s natural advantages, and innovation in the mining sector. Countries should look to move from being mainly resource exporters, to also developing higher value products, including for the renewable energy transition, within the domestic economy.

Developing a sustainable electronic waste management sector is also of increasing importance to stem the leaching of toxic chemicals into land and water resources. The International Labour Organization estimates that development of the e-waste management sector in Argentina alone could directly generate 1,200 jobs, with a further 33,000 positions created indirectly.

Melissa MacEwen is Programme Manager of the Energy Environment and Resources Programme at Chatham House.

By Dr Elena Lazarou

Many Latin American countries are entering 2021 with fragile economies and challenged democracies, amidst the second wave ofCOVID-19.  The pandemic has disproportionately hit the region due to the limited capacity of its health systems, as well as to the size of its informal sector, which in some countries reaches over 50 per cent. Managing the economic and health consequences of the pandemic, as well as its implications for populist and authoritarian tendencies in several of the region’s countries, will be the biggest challenge for Latin America in 2021. As a result, the limited foreign policy activism of Latin American countries, which has been a trend in recent years, is likely to continue.

Reaching some form of solution to the crisis in Venezuela, which also addresses the humanitarian meltdown, will be the most important Latin American foreign policy issue for the international community. But given the internal challenges faced by the region, it is improbable that such a solution will come from the region itself: its regional cooperation structures have weakened or faded and major regional powers, particularly Brazil, are reluctant to demonstrate  leadership.

One possible solution could come from a closer alignment between the new US administration and the EU. While the two share the same objective of a democratic transition in Venezuela, diverging approaches, such as those in the run- up to the Venezuelan National Assembly elections in December, demonstrated that there is more space for a robust transatlantic approach, which could also bring in the OAS. The economic and political leverage of China, which could grow even more as a consequence of COVID-19, will be a factor to take into account in this context.

Dr Elena Lazarou is an Associate Fellow with the US and Americas Programme at Chatham House and Acting Head of External Policies at European Parliamentary Research Service.

By Dean Andrés Velasco

In 2021 Latin America will remain a battleground between liberal democrats and populists of both the right and the left. In recent years populists have been on the rise, but the tide seems to be turning.

Many governments in the region mishandled the COVID-19 pandemic, but demagogues from Jair Bolsonaro in Brazil to Andrés Manuel López Obrador (AMLO) in Mexico proved particularly inept. They wasted months discrediting scientific advice and minimizing the risk posed by the virus. As a consequence lives were lost, and jobs destroyed.

Yet populist leaders have proven skilful at shifting blame. Whenever he is told statistics that show the failure of his government´s policies, the Mexican president replies that he has an alternative set of figures. Argentina´s government is without a plan to alleviate the country´s deep economic contraction and increasingly wobbly finances, but so is the opposition. Elsewhere in the region, centrist parties remain unpopular and political volatility makes forecasting fraught. Peru had three presidents last year and is now entering what looks to be a hard-fought political cycle.Chile will hold seven elections in 2021 in addition to writing a new constitution, all  in the midst of a pandemic and double-digit unemployment.

Donald Trump´s demise in the United States will give Latin American liberal democrats a much-needed confidence boost. At the same time, rising commodity prices and rock-bottom world interest rates will provide incumbent populist regime with some breathing room. Was 2020 the year of peak populism in the region? Perhaps, but it is too early to be sure.

Dean Andrés Velasco is the Dean of the School of Public Policy at the London School of Economics & Political Science. Velasco also served as the Minister of Finance in Chile from 2006-10.