E=MC2 or Washington's Latin American Equation

02/16/2011 12:33 pm ET | Updated May 25, 2011
  • Rabah Ghezali Associate Professor of Economics at Sciences-Po Paris

Three imports shape US foreign policy towards Latin America: Energy, Migration, Cocaine and the Criminality that too often goes with drugs. A scientific mind would be tempted to summarize Washington's policy towards the rest of the continent using Einstein's equation E=MC2. Instead of describing the mass-energy equivalence, this equation within a diplomatic context may well mean:

Energy = Migration X Cocaine2

For more than a decade, the US relationship with Latin America has been the result of a series of ad hoc reactions to crises rather than long-term strategy. Successive administrations have settled for fire fighting instead of clearing the deadwood. There have, of course, been intermittent efforts to secure free trade agreements, such as NAFTA and CAFTA. For the most part, however, US diplomacy has focused on securing access to Latin American energy resources, fighting illegal immigration, and combating drugs through targeting supply (Plan Mérida and Plan Colombia). On the rare occasions when the US has ventured into politics, its efforts have proved belated and shapeless. Its interventions over the Honduran presidential conflict and the Ecuadorian crisis are just two instances of the pitfalls of acting without any such overarching strategy.

The US foreign policy interest in Latin America is above all in energy. US anxiety over dependence on Middle Eastern oil reserves is well publicized, not least because it empowers states perceived as anti-American. It is more often overlooked that the US relies on Latin American for than one in four barrels of oil imported -- a fact that explains why the state department analyses regional developments through the lens of energy security.

In recent years, policy analysts have had cause to voice concern. First, the energy trade has become more politicized; secondly, a series of technical problems have resulted in production bottlenecks and posed the threat of reduced output. There are fears that Latin American will cease to be a reliable supplier and that it will contribute to soaring energy prices. Years of underinvestment in the nationalized Mexican oil sector have ominously resulted in falling production in the country that is now the US's second largest supplier, ahead of Saudi Arabia. Venezuela's oil sector is collapsing under the mismanagement of its blinkered political class. Shielded by the rapid growth of other exports, Brazil might well keep its reserves for its growing domestic market. Ecuador and Bolivia's resurgent resource nationalism is at odds with Washington's needs. Latin America has always been unstable, but rarely have developments in so many countries unfolded so consistently against US interests. What does the US stand to lose with oil imports becoming more costly? Most obviously, it will potentially endanger the US economic recovery and damage its trade balance. Perhaps more seriously, higher petrol pump prices will worsen the lot of an angry 'middle America' that can no longer even enjoy the palliative of cheap credit to stave of the reality that social mobility and increasing real term wealth are illusions.

More positively, energy provides opportunity for dialogue with Latin American countries on issues other than immigration, the anti-drug fight, and free trade. Latin America presents potentially lucrative investment openings in traditional and alternative energy resources. Washington needs to confront its energy challenge by seizing the moment for greater economic and political cooperation. Fostering good relations with Latin America is now doubly imperative because of Chinese competition for energy in the region.

US immigration policy seems dictated by populist, domestic-politics concerns rather than economics or diplomacy. Increasing border control resources plays well with many voters, but fails in its objectives. The number of border patrol officers has more than trebled over the last decade, reaching more than 20,000 -- the equivalent of roughly nine officers for every mile of border. Constructed at great expense, the now-halted 700-mile-long, 21-foot fence along segments of the US-Mexico border is a suitably grotesque monument of this failure. In reality, no amount of investment will be effective without the cooperation of the Latin American authorities. So keenly pre-emptive in other parts of the world, the US has proved strangely reluctant to tackle to causes of illegal immigration closer to home. Dialogue with Latin American countries over migration has proved difficult in the past because US policy has zigzagged in line with labor shortages and voting schedules - an inconsistency that reflects deep public and political divisions. Above all, Washington needs to treat Latin American governments as equals insofar as they are now interdependent.

Latin America is one of the US's fastest-growing trading partners, but it has long been its primary supplier of illegal drugs. The ill-advised US policy has been to spend enormous sums to reduce supply by eradicating crops and disrupting drug flows while doing little to combat domestic demand, especially among the professional classes. Ironically, counter-narcotics efforts to reduce the supply from Columbia and Mexico can make the drug trade still more lucrative by forcing up prices for US consumers. Moreover, public opinion of the US in such countries inevitably suffers because there is a very real sense that the US government and consumer bankroll opposing sides in prolonged power struggles. While proving disastrous for Latin American countries and threatening the collapse of political institutions over the border in Mexico, the US policy has hardly had a beneficial domestic outcome -- in fact, drug use and drug related violence have not declined significantly.

Drug eradication has done little to address the underlying factors that drive production, trafficking, and consumption. Washington needs to recognize the deep-rooted challenges that require longer-term strategies, such as fostering closer ties with foreign government agencies and civilian groups in Latin American that bear the brunt of the drug wars. The drug-trade is multifaceted and all parts of the chain need to be targeted. But perhaps the key link in the chain is the widespread poverty, inequality, and insecurity in Latin America that make the trade appear a rational option for so many. Any measures to combat these root causes would serve both humanitarian and realpolitik ends.

The election of Barack Obama was much welcomed in Latin American after a little-admired Republican administration. But after pledging to engage with Latin America in June 2009 and attending the Fifth Summit of the Americas in Trinidad and Tobago, the president has been inactive and no new strategy has emerged.

US policy reflects the constraints that President Obama faces. On the one hand, his domestic agenda has taken precedence and what remains of a foreign policy agenda has been dominated by Iraq and Afghanistan. On the other hand, the president seems powerless to counter the growing independence of Latin America, the European and Chinese economic presence, and the enduring anti-American populism and rhetoric. With impressive economic growth and a strong diplomatic presence, Brazil has emerged as a new regional power that further complicates a new US policy. For all these difficulties, however, there is surely too much at stake for Latin America to remain a low priority in Washington's foreign policy agenda.