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Commentary

What Obama Can(Not) Do for Latin America


     
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WASHINGTON—President Barack Obama will meet his Latin American and Caribbean counterparts in April at the Summit of the Americas. They expect much from him—never a good sign. What approach should he bring to the table?

The most important thing the United States can do is to fix its own economy. Otherwise, we will likely see the return of the region’s dependency on multilateral bodies such as the International Monetary Fund, whose presence poisoned relations between Latin America and the outside world in the past.

A decade ago, the IMF was a major player in Latin America, having lent an accumulated $50 billion. Since Brazil and Argentina paid off their debts, the IMF became irrelevant: The fund’s initials had the whiff of a bygone era. Now, because of reduced access to capital markets, a drop in exports and about $250 billion in debt that falls due this year, many governments are thirsting for funds. The IMF—that hairy monster parents used to threaten their kids with when they didn’t finish their meal—is back! Other financial bodies are expanding their offers of credit. The Inter-American Development Bank has promised $6 billion to commercial banks and will make another $12 billion available for various public projects.

This is an unwelcome return to Latin America’s political and economic infancy when it relied on wealth transfers from the developed world. As Myles Frechette, a former U.S. ambassador to Colombia, wrote in a recent paper, it needn’t be this way: “The United States can play a key role for Latin America and the Caribbean in recovering from this economic crisis. . . . For most countries in the region, the U.S. is still the single most important export destination.”

While 15 trade agreements will link five Latin American nations with 11 Asian economies by 2010, Asia is also in trouble and exchanges between China and Latin America are only one-fifth of the amount of trade between the U.S. and Latin America.

The second thing Obama can do is reform U.S. immigration. Ten free trade agreements between the U.S. and Latin American countries were signed in the last decade, but trade will not be free until there is labor mobility—as the European Union eventually realized. The U.S. should listen to business leaders across the nation and heed the numerous studies that indicate that the American economy needs a steady flow of immigrant labor. The case for high-skilled immigrants is almost self-evident, but it is also strong for low-skilled immigrants. A study by the U.S. Department of Labor states that more than half of the growth in labor demand in the top 25 occupations will occur in low-skilled jobs that cannot be outsourced.

There are numerous proposals flying around. In his recent book A World of Wealth, Thomas Donlan, who is also the editorial page editor of Barron’s, a conservative publication, proposes welcoming immigrants who have a job and agree to take no social services of any kind—except education—before they become citizens. These are the kinds of ideas a U.S. government interested in engaging its neighbors should be at least mulling over.

Finally, the U.S. should rethink the war on drugs. In 1992, at a summit in Cartagena, the first President Bush agreed with his Mexican and Andean counterparts that the effort should be directed against consumption in the U.S. as much as against supply. Two decades later, neither has been stemmed. The bloody conflict in which Mexican President Felipe Calderon’s government has been caught up—and which has cost more than 8,000 lives in two years—is a child of the ill-conceived approach to the drug issue over the decades. Public opinion in the U.S. is not ready for measures such as relaxing prohibition, but Obama should at least start a hemispheric conversation on ways to de-emphasize the crackdown approach.

There are other measures Obama could take to endear himself to countries such as Brazil—for instance, getting rid of the ludicrous 54 percent tariff on imports of ethanol from that country. And there are tactical approaches to be adopted in certain trouble spots—such as letting Hugo Chavez hang with his own rope. But, ultimately, undoing the U.S. economic mess, beginning to look at the mobility of people—and not just goods and services—as part of trade relations, and starting a conversation about alternative ways to confront drugs would be by far the best contributions Obama could make to a region of the world to which he has yet to travel.
Alvaro Vargas Llosa is Senior Fellow of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. His Independent Institute books include Global Crossings: Immigration, Civilization, and America, Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.

New from Alvaro Vargas Llosa!
GLOBAL CROSSINGS: Immigration, Civilization, and America

The erosion of national boundaries—and even the idea of the nation state—is already underway as people become ever more inter-connected across borders. A jungle of myth, falsehood and misrepresentation dominates the debate over immigration. The reality is that the economic contributions of immigration far outweigh the costs. Learn More »»






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