The Latin American Dream

23 May 2013

* May Article of the Month *

Recently it's all been going Latin America's way. The next football World Cup and the next Olympic Games will be held in Rio de Janeiro, Brazil. Two of the most powerful and influential institutions in the world are now under the stewardship of Latin Americans for the very first time - Pope Francis head of the Catholic Church and the new head of the World Trade Organisation- Roberto Azevedo. Even the International Monetary Fund has indicated that in 2013, the economic growth of the Latin American states is likely to "edge higher". So does this mean we are seen another power transfer, this time snatched from Chinese fingertips and into the hands of our Latin American counterparts? Nothing is ever certain in politics or economics, but it has never looked more prosperous for South America in a long time, this could be their year, or even their decade?


You don’t often have to look far nowadays to see something to do with Latin America in the news. Whether it was the aftermath of the passing of Hugo Chavez in Venezuela or Argentina getting aggressive over the Falkland Islands they really are making their mark on the global stage. Even heavyweight political figures are keen to be getting friendly with the Latin American countries, no one more so than Barak Obama, who has consistently been involved with his southern neighbours throughout his time in office. On 4th May, Obama was in Costa Rica and due to meet at a summit with other Central American leaders; he explained on the day that the growth of Latin American countries was key to the fight against the war on drugs, something that greatly affects the USA. Another political figure who is eager to show their presence in Latin America is President Mohamed Morsi of Egypt who left from Cairo on 7th May as head of a large economic delegation with the intention of strengthening ties with the increasingly flourishing Latin American countries as well as paving the way for Latin American - Arab World cooperation in the future. It seems as though everyone wants a little bit of the Latin American dream.

Another way in which Latin America has been showing its capabilities is the gains that it has made in the economic world. Brazil, an integral member of the BRICS economic bloc is registering consistent annual growth levels and the second largest economy in the group behind China. But it has been seen that China is in fact losing out to the Latin American growth; with many US companies snubbing the opportunity to set up business and factories in China, instead favouring countries such as Mexico and Brazil, especially in the knowledge that Chinese wages have quadrupled in the last few years. Many now regard China as overly expensive whereas Mexico is seen as home to highly skilled labour that's cost-competitive. In addition to all of this, Mexico has excellent international trade deals, more than any other country in the world, paired with reasonable exchange rates in comparison to the Chinese rate going through the roof. It's not just Mexico and Brazil who are leading the way, Paraguay and Panama are included in the top 20 nations for 2013 GDP growth- showing that Latin America is not just a two-trick pony. 

Socially, Latin America has improved leaps and bounds in the past few years. Crime levels have been falling and the war on drugs seems to have begun to make a real impact. Only last month the small Latin American state of Uruguay approved a bill that permitted same-sex marriage, and the vast majority of South American countries have anti-discrimination laws of one sort or another. This shows the clear social advancement that has taken place in the South, although in Central America the same level of toleration is still yet to be reached. The Latin American countries also register fairly moderate and acceptable scores on the Human Development Index, with no real causes for concern in any country. Therefore I think it would be safe to say that Latin America is not only advancing economically but also socially too.

Here comes the hard part, the politics. Latin America has always struggled to achieve real political stability and although some countries are improving, there are many still with a mountain to climb. First let's look at positive side of things; Brazil, Latin America's biggest economy, has had political stability for a while now, with a multi-party democratic republic, the socialist Worker's Party has been at the centre of Brazilian politics since its formation in the 1980s. In Peru, they have their first ethnic indigenous president - Ollanta Humala- showing that social tension may just be leaving the nation. However, both Brazil and Peru have had their problems, principally in corruption, an issue that infects almost all Latin American countries. In Brazil the mensalão scandal has been tarnishing Brazilian politicians (including those close to former president Lula) since 2006 and the court case, ending last October, found three men guilty of bribery. In Peru, former three-time president Alberto Fujimori was criticised for his authoritarian approach during the 1990s, and in 2000 he fled to Japan amid corruption accusations. Elsewhere in Latin America, on 21st May, Bolivia passed a controversial piece of legislation that would allow Evo Morales the opportunity to be elected for a third time as president, despite the constitution stating otherwise. Overall, the politics of Latin America is on a knife-edge, it can go one of either two ways; either it settles down and gains stability or it falls into the trap of corruption, greed and even civil war once more. 

It's not only corruption and politics that are holding back Latin American countries from thriving on the global scale; it's also the huge levels of factionalism, conflict and crime that affects nearly every country in the region. For example, Venezuela is subject to the most violence on the whole of the continent with a homicide rate of 57 in every 100,000, a figure tripling in the past decade - things are not improving. In Mexico, drug trafficking has led to the formation of drug cartels and vast amounts of organised crime, with Cuidad Juarez having the highest murder rate in the world - 272 murders per 100,000 residents. Finally, the country in which the Latin American dream is most firmly placed, Brazil, has one of the largest economic inequalities on Earth, with one fifth of the 173 million population accounting for only 2.2% of national income (according to the World Bank). This fuels grave amounts of social tension with armed robberies and sexual assaults not uncommon in the larger cities such as Rio de Janeiro. Crime and violence really is an issue that must be severely addressed before any considerable economic development can take place.

The Latin American Dream is still alive and well, the economies of Latin America are booming and thanks to foreign investment, particularly from the USA and China, things are on the up. In addition to this, social changes are taking place, with toleration rising and a general acceptance of difference seems to be reaching these nations. However, Latin America does have a challenge when it comes to politics and crime, both issues are serious and must be addressed, efforts and improvements are being made in the war on drugs, but more is needed before the Latin American Dream can come true. The question for us is whether the UK will look to forge permanent bonds with the countries in this emerging continent. 

I expect only an answer to our EU conundrum will provide an answer to that question.

Backbench Foreign Secretary

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