The EU-Community of Latin American and Caribbean States (CELAC) Summit was a top priority of the Spanish government, which holds the rotating EU Council presidency. Spain met its objectives with representation from the EU’s twenty-seven member states and the thirty-three CELAC members. But it wasn’t just any representation. LAC countries sent twenty-three presidents and prime ministers to Brussels—the same number of heads of state and government who attended last year’s US-hosted Summit of the Americas, with one big difference: While Cuba, Nicaragua, and Venezuela joined their cohorts in Belgium, none received an invitation to Los Angeles.

The tone of the summit was set at the EU-LAC Business Round Table that took place immediately preceding the leaders’ meeting. Speaking to an overflow audience, European Commission President Ursula von der Leyen opened the gathering in the Berlaymont Building, the Commission’s headquarters, with an emphatic message: “Latin America and the Caribbean and Europe need each other more than ever before.” She then went on to reinforce that “Europe aspires to be a partner of choice for Latin America and the Caribbean,” while announcing more than forty-five billion euros of “high-quality European investment” that will “come with a focus on building local value chains.” Her announcement sparked a round of applause in the room among attendees, who likewise saw the importance of diversifying and deepening Europe’s partnerships. 

On the CELAC side, upon taking the stage, Brazilian President Luiz Inácio Lula da Silva highlighted key areas of mutual interest with the EU, including combating climate change and deforestation, while staying clear of comments regarding Ukraine—on which he has differed from his European counterparts. Lula’s remarks were warmly greeted as well but without the same level of excitement as von der Leyen’s financial announcement.

The takeaways: Europe—reeling from Russia’s full-scale invasion of Ukraine and its effects, along with growing apprehension over increased Chinese assertiveness—realizes that it needs to double down on its global partnerships. Here, CELAC represents thirty-two votes at the United Nations (UN). (Venezuela is unable to vote due to being in arrears in the payment of its UN dues.) CELAC is also a fountain of critical raw materials, which Europe is increasingly focused on securing to fuel its green transition. And although China was not mentioned, the summit’s focus on quality and local investments is certainly a swipe at Chinese financing and a doubling down on the EU’s strategy of diversifying its supply chains. 

For LAC countries, no convincing was needed to get regional dignitaries to show up. Europe is willing to put forward substantial strategic planning and the funding behind it as it aspires to be “a partner of choice” for LAC. Launched alongside the summit, the new EU-LAC Global Gateway Investment Agenda commits the funding announced by von der Leyen for more than 130 projects through 2027. These projects revolve around four pillars of mutual interest: a fair green transition, an inclusive digital transformation, human development, and health resilience and vaccines. These pillars also stand in stark contrast to the top-down Chinese investments in many parts of the region that have less of an eye toward long-term development objectives. 

A distinctly European approach to diplomacy

The summit also reflected the EU’s differing approach to LAC compared with the United States. Start with the invites to Brussels for Cuba, Venezuela, and Nicaragua, with Cuba’s leader, Miguel Díaz-Canel, in attendance. This reflects a softer approach on Europe’s part toward the leaders of countries where the United States has imposed sanctions over abuses of power and human-rights concerns. But it also shows that Europe has less diplomatic leverage in the region than that enjoyed by Washington. The United States was able to cajole countries into attending last year’s Summit of the Americas despite many leaders’ opposition to the snub of Cuba and Venezuela, in particular. CELAC leaders would have been less willing to do so in Brussels. This makes sense. The United States—despite concerns about the growing presence of extra-regional actors in LAC, many of which, unlike Europe, carry nefarious intentions toward US interests—remains the most important strategic partner for the hemisphere.

As well, the Global Gateway—in many respects Europe’s counterproposal to China’s Belt and Road Initiative—shows that Europe recognizes its need to match diplomatic outreach with concrete deliverables and large-scale financing. The billions that are slated to come from Europe far surpass US investment announcements at last year’s Summit of the Americas. So while Europe leaned in on specific projects, the United States used its hemispheric gathering to focus on partnership strategies to jointly tackle issues ranging from inclusive economic development to climate.  

Perhaps the biggest feat for the EU was the joint agreement on a declaration coming out of this week’s meeting. With such a diversity of interests and priorities among CELAC members and within the EU, a final joint declaration did not always seem possible. The EU’s proposed language condemning Russia’s invasion of Ukraine was a non-starter for many CELAC diplomats who tend to view the war as primarily a European problem and are concerned about getting dragged into taking a side. Meanwhile, some EU member diplomats have said they have red lines against removing the language condemning Russia’s invasion. CELAC diplomats also wanted a reference in principle that the EU should give reparations for slavery to its member states. The declaration that emerged was the product of skillful negotiation balancing EU and LAC priorities—and competing positions within each region.

Point fifteen of the declaration was the biggest achievement of the summit:

We express deep concern on the ongoing war against Ukraine, which continues to cause immense human suffering and is exacerbating existing fragilities in the global economy, constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks. In this sense, we support the need for a just and sustainable peace. We reiterate equally our support for the Black Sea Grain Initiative and the efforts of the [UN secretary general] to secure its extension.

Although Nicaragua abstained from signing on to the declaration because of this Ukraine war language, the rest of the attendees—including Cuba and Venezuela—agreed to it. This language is a major accomplishment for Europe, while CELAC walks away with a substantial investment pledge from the Global Gateway that others could not match.

Looking ahead to 2025

Europe has clearly unleashed a newfound commitment to the Americas. This summit was a strategic balancing act to shore up European partnerships with a region that is becoming vital to global interests and solutions to world problems. However, the EU’s pledging of billions of euros is one thing; delivering the funds and leveraging them into a new economic partnership will require serious follow-up and sustained engagement. Meanwhile, CELAC countries are increasingly able to take advantage of changing global dynamics to advance regional interests. 

What would be the best course for the future? The United States and Europe should each have a seat at the table at their respective summits with LAC countries. The EU has now agreed to host a summit with CELAC every two years—the next one will be in 2025, with Colombia offering to host. The Dominican Republic will host the next Summit of the Americas that same year. Doesn’t some degree of alignment make sense heading to 2025? As in many other priority global issues, transatlantic collaboration will ultimately help to win the day. 

Jason Marczak is senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. He participated in the EU-CELAC Business Round Table in Brussels preceding the leaders’ meeting. He is on Twitter at @jmarczak.

Jörn Fleck is senior director of the Atlantic Council’s Europe Center.

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Key to these international aspirations is the US domestic agenda. Expanding access to critical minerals and increasing manufacturing capacity is essential for meeting the Biden administration’s decarbonization targets. Through legislation like the CHIPS and Science Act, the Bipartisan Infrastructure Law, and the Inflation Reduction Act (IRA), Biden has committed to increase domestic mining, processing, and manufacturing operations to boost the US middle class and build economic resilience. Federal policies have created powerful incentives for manufacturers, such as Tesla, Schneider Electric, General Motors, and Ford, to establish manufacturing facilities in North America.

City leaders have taken advantage of recent legislation to deliver economic growth to their communities. The IRA’s incentives for investments in clean energy are prompting the federal government to work closely with US cities to make manufacturing investments that can increase US energy security, reduce emissions, and support domestic manufacturing. Since the signing of the law, companies have  announced 31 new battery manufacturing projects, 96 gigawatts of new clean power to add to the grid, and $210 billion of investments in the electric vehicle (EV) industry, bringing jobs and growth to US cities.

The role of mayors in the clean energy transition

The growing diplomatic power of mayors was on display at the first-ever Cities Summit of the Americas held in Denver in April 2023. The summit fostered conversations on bridging national-level support and community-led action to build robust clean energy supply chains. In Denver, mayors exchanged best practices in taking advantage of recent legislation and establishing clean energy industries. Mayor Tim Kelly of Chattanooga, Tennessee, highlighted workforce development as a central pillar of Chattanooga’s growth in low-carbon industries. Mayor Luis Colosio of Monterrey, Mexico, outlined the importance of overcoming political and regulatory obstacles to usher in major regional projects, like his city’s new Tesla Gigafactory. He also emphasized the need to incorporate community input in municipal investment strategies. 

The summit signaled the administration’s new efforts recognizing cities and city-level decisionmakers as key actors for making progress toward US decarbonization and climate objectives and strengthening ties with like-minded partners across the Western hemisphere. At the summit, the US Department of State also launched a new Cities Forward initiative that aims to strengthen mayoral partnerships by matching US, Latin American, and Caribbean cities to address urban sustainability challenges. Latin America and the Caribbean have abundant mineral resources, and are important allies in the United States’ efforts to establish new clean energy supply chains for products like batteries, solar panels, and EVs. These new initiatives tap into mayors’ dual ability to connect with local constituents and forge international partnerships based on common challenges.

Strengthening partnerships with Latin America and the Caribbean

Regional mayors and officials in Latin America and the Caribbean are crucial partners for ensuring social license to operate given their unique understanding of community concerns and challenges. The region accounts for 35 percent of global production of lithium, 40 percent of copper, and 10 percent of nickel. These resources will play a crucial role in the Western hemisphere’s transition toward renewable energy and electrification and ultimately contributes to global climate objectives.

However, increased mining in Latin America could instigate regional discontent and threaten hemispheric relations if voices of local leaders are not included. In Peru, community backlash against the Chinese-owned Las Bambas copper mine halted production for four hundred days, costing the company $9.5 million per day. In Argentina, protests against a new local mining law led to its swift repeal by a provincial legislature.  Local officials have the convening power to bring communities together to solicit buy-in and leverage opportunities within energy transition supply chains. Peer-to-peer exchanges between mayors like those at the Cities Summit and investment projects such as the Cities Forward initiative can mitigate these challenges by expanding opportunities for cities to reap the benefits of major mining and manufacturing projects.

While individual cities and towns are already stepping up to the plate, national governments need to provide assistance to help cities establish industries across the Americas. Municipalities need workforce development programs to meet the demand from eager investors, standards in environmental, social, and governance (ESG) to attract investment, and resource management to improve their absorptive capacity to accept new projects at scale. By providing greater coordination and resource sharing from both the bottom up and top down, the United States can make progress toward empowering cities and towns to play a role in the clean energy supply chain while benefiting from the industry’s economic growth and opportunities.

Establish technology standards with consultation from local governments 

National policies can be adapted to better suit the needs of local government, but that only happens if local leaders have a seat at the table. The US Government National Standards Strategy for Critical and Emerging Technology released last May calls for new standards to define the development of renewable energy technology, yet includes no mention of perspectives from local governments. The American National Standards Institute (ANSI) should include stakeholders from mayoral and statewide offices to help shape ESG standards for the mining, manufacturing, and producing of critical minerals to ensure that future regulations are strong but not onerous. At an international level, local officials from mining communities should be included in ongoing discussions to set sustainable mining standards in the Americas alongside national governments and the mining industry.   

Establish regional workforce development programs and streamline visa processes

For cities to attract investment and deliver economic benefits for local communities, a trained workforce is required. Technological advancement and increased automation reduce the number of people needed on the assembly line but increases the demand for a highly skilled workforce. For example, US semiconductor companies, buoyed by the CHIPS and Science Act, will have 300,000 unfilled vacancies for skilled engineers by 2030. Beginning with the North America Leaders Summit, the three heads of state should collaborate on establishing North American workforce training programs and streamlined visa processes to create a stronger workforce across the region.

To further promote regional training and information sharing, the Unit for City and State Diplomacy at the US Department of State should organize mayoral convenings on the sidelines of major energy conferences across the region. The Caribbean Renewable Energy Forum in Miami, International Renewable Energy Agency’s Investment Forum in Latin America, and Energy Transition North America present opportunities for mayors to hear directly about investment opportunities and share strategies for meeting industry standards.

Leverage existing subnational networks to communicate USG funding opportunities 

Trusted city networks can magnify the impact of national-level initiatives. In 2022, the US Department of Energy (DOE) announced $39 million in funding for universities, national laboratories, and private sector-led projects to increase domestic supply of critical minerals. The Bipartisan Infrastructure Law appropriated over $62 billion to DOE to support a range of domestic clean energy projects, including grants targeted at local governments. By utilizing already established subnational networks like C40 Cities and The United States Conference of Mayors, the DOE, along with other US agencies, can better disseminate programs and resources available to empower city-level efforts to leverage investments and funding opportunities to power the low-carbon transition.   

From local to global: Strengthening clean energy supply chains

While the United States continues to establish national and international policies to build new clean energy supply chains, cities and towns are implementing national objectives in real time. Across the hemisphere, city councils mediate tensions between communities and mining companies, subnational departments of labor enroll students in training programs, and mayors devise standards to raise the federal ESG benchmark. Local leaders will continue to play a fundamental role in driving both the standards and implementation of projects that will shape a low-carbon energy future. These efforts have been on full display during the Biden administration’s Investing in America tour. 

Maia Sparkman is an assistant director at the Atlantic Council Global Energy Center

Willow Fortunoff is a former assistant director at the Atlantic Council Adrienne Arsht Latin America Center and Fulbright Research Fellow

Meet the authors

Staff

Maia Sparkman

Assistant Director

Global Energy Center

Africa Climate Change & Climate Action

Former staff

Willow Fortunoff

Adrienne Arsht Latin America Center

Americas Caribbean

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“Women and girls in the Caribbean face unique challenges that prevent them from reaching equal footing in society,” said Valentina Sader, AALAC associate director and leader of the center’s gender-related work. “These include lack of access to critical resources to rebuild after natural disasters and barriers to political representation.”

Studies suggest that elected or appointed women represent less than half of all political offices in the Caribbean, and that 46 percent of women in the region experience violence at least once in their lifetime.

“Solutions to the region’s major challenges require the talent, skills, and ideas of the whole population, including women and girls. Curbing gender-based violence, incentivizing financial inclusion, and strengthening women’s political participation are fundamental to the health and well-being of our hemisphere, including the Caribbean, now and for generations to come,” said Jason Marczak, AALAC senior director.

AALAC will leverage its global and regional networks and its uniquely positioned Caribbean Initiative to raise awareness and foster dialogue on the challenges facing women and girls in the Caribbean. Specifically, the project will cover:

1. Peace, security, and gender-based violence
2. Democracy and political representation
3. Economic recovery and empowerment
4. Climate and climate financing

“In the same way that the Atlantic Council has been able to strengthen relationships between civil society organizations and policymakers in the United States and across Latin America, I feel confident that the Caribbean will greatly benefit from this proven capacity,” said UN Women Multi-Country Office – Caribbean Representative Tonni Brodber.

AALAC will work with UN Women to hold discussions and consultations with in-region individuals and organizations, multilateral groups, private sector representatives, and financial institutions. A key objective will be to facilitate a deeper understanding of social norms around gender in the Caribbean, build momentum and secure buy-in from relevant stakeholders across sectors and regions, and generate concrete policy recommendations with a gender-based approach for the Caribbean.

For questions, please contact press@atlanticcouncil.org.

ABOUT THE ADRIENNE ARSHT LATIN AMERICA CENTER
The Atlantic Council’s nonpartisan Adrienne Arsht Latin America Center (AALAC) broadens understanding of regional transformations while demonstrating why Latin America and the Caribbean matter for the world. The center focuses on pressing political, economic, and social issues that will define the region’s trajectory, proposing constructive, results-oriented solutions to inform public sector, business, and multilateral action based on a shared vision for a more prosperous, inclusive, and sustainable future.

Its Caribbean Initiative began programming in February 2021 to raise awareness about key Caribbean Community (CARICOM) priorities with US and global stakeholders while deepening US engagement with the region around shared interests. The Initiative is a platform for US and Caribbean stakeholders to offer new and innovative insights to advance a closer US-Caribbean partnership and the overall prosperity, stability, and well-being of the region.

ABOUT UN WOMEN
UN Women is the UN organization dedicated to gender equality and the empowerment of women. A global champion for women and girls, UN Women was established to accelerate progress on meeting their needs worldwide. For more information visit https://caribbean.unwomen.org/en

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The USMCA has certainly been successful in increasing the volume of Mexico’s trade with the United States and Canada. According to the US Census Bureau, in April 2023, the United States imported more goods from Mexico than from any other country; in 2022, Mexico-US trade was almost 27 percent higher than in 2019, and Mexico-Canada trade grew 21.8 percent in these same years. Between 2020 and 2023, Mexico received fifty billion dollars in US and ten billion dollars in Canadian investments.

This increase in trade and investment flows is explained not only by the USMCA’s implementation, but also by the Biden administration’s decision to diversify supply chains, relocate production to North America, and “de-risk” from China. By seeking to reduce the vulnerability of supply chains in North America, the integration facilitated by the USMCA acquired greater relevance for companies, workers, governments, and societies.

Even though the agreement has spurred dynamism in trade and investment, its implementation has not gone without serious challenges and confrontations, which Mexico will need to address before the 2026 joint review. These include differences in the way the three countries have chosen to comply with the USMCA, heightened scrutiny on labor and environmental issues, and incomplete implementation of the agreement’s provisions.

Unsettled disputes

First, Mexico has faced difficulties on both sides of the USMCA’s dispute settlement mechanism, established in Chapter 31. Mexico’s use of this mechanism signals that it considers the agreement an effective instrument to defend its commercial and investment interests. Together with Canada, Mexico requested the establishment of a panel to settle its differences with the United States regarding the interpretation of the methodology to determine the regional value content of essential auto parts in cars manufactured in North America. The panel ruled in favor of Mexico, but there seems to be no interest in enforcing the ruling.

Mexico has also been the target of Chapter 31. Both the United States and Canada requested consultations regarding Mexico’s energy policy in July 2022 and restrictions on trade in genetically modified corn in June 2023. While both consultation processes could still lead to requests for the establishment of panels, the parties have been in conversation regarding the substance of their concerns.

Chapter 31 is of great value to the private sector in North America because it offers a legal tool to solve differences. The USMCA offers a dispute settlement mechanism that works, unlike the World Trade Organization Dispute Settlement Body, which is paralyzed. The USMCA’s panel reports are binding, and panel decisions are not affected by domestic political pressures.

However, it is the three governments’ responsibility to comply with the panels’ decisions, even if they are unfavorable, and to make sure that rulings are fully enforced. Not doing so undermines the value of the USMCA dispute settlement mechanism and the agreement itself.

High standards, heightened scrutiny

Second, Mexico has been subject to scrutiny on labor and environmental matters, reflecting US and Canadian national priorities and their need to respond to political pressure from their own domestic constituencies. Regarding labor, under the Rapid Response Labor Mechanism, the United States has initiated eleven cases against Mexico, and Canada has initiated one. Mexico’s labor authority has sought to address the concerns raised in each case, avoiding sanctions and prohibitions on exports.

On environmental matters, Mexico has faced questioning from its partners regarding compliance with its environmental legislation and its USMCA obligations. For example, in February 2022, the United States requested consultations with Mexico on the protection of the vaquita porpoise, which is associated with totoaba illegal fishing. In May 2023, the US Fish and Wildlife Service determined that Mexico has not done enough to prevent the illegal trafficking of totoaba, so later this month, US President Joe Biden could decide to impose an embargo on the trade of wildlife products from Mexico, in line with Mexico’s Convention on International Trade in Endangered Species of Wild Fauna and Flora obligations, which are also recognized in the USMCA. In labor and environmental affairs, the United States and Canada have used and may continue to use the USMCA mechanisms to pressure Mexico to comply with its obligations, since these issues are key to their own domestic political agendas.

Unfinished business

Third, Mexico has yet to fully implement several USMCA provisions. These include the Asia-Pacific Economic Cooperation Cross-Border Privacy Rules Framework, established in Chapter 19, which is already overdue. In addition, Mexico will have to become a signatory to the 1991 agreement of the International Union for the Protection of New Varieties of Plants as provided in Chapter 20. Likewise, the USMCA has a built-in agenda of future negotiations, such as the inclusion at the sub-federal level of provisions on state-owned companies and designated monopolies (Chapter 22), which should have been concluded in June 2023. Mexico needs to make sure that these provisions are enforced according to its USMCA commitments, since this will align its regulations and policies with those of its North American partners.

At the halfway point between USMCA’s entry into force and its first joint review, Mexico has seen a substantial increase in its trade and investment flows, which are key engines for its economic growth. However, Mexico still faces serious challenges in the full implementation of its commitments and in making sure that the United States also complies with a panel report favorable to Mexico. It is in Mexico’s interest to fully comply with the agreement while also requesting compliance from the United States, since that will provide certainty and predictability to investors in the region. This will facilitate the agreement’s extension at the six-year review in 2026 and will allow Mexico to promote opportunities for North American productive integration and the relocation of supply chains.

Luz María de la Mora is a nonresident senior fellow with the Atlantic Council’s Adrienne Arsht Latin America Center, where she supports the Center’s Mexico work. From December 2018 to October 2022, she served as undersecretary of foreign trade in the Mexican Secretariat of Economy, during which she helped implement the USMCA.

The post A midterm report card for Mexico’s USMCA progress appeared first on Atlantic Council.

In the past twelve months, Vice President Kamala Harris launched the US-Caribbean Partnership to Address the Climate Crisis 2030, welcomed leaders to Washington, and met in person with leaders in The Bahamas. This has helped build goodwill in the region. But US visits and diplomatic engagement have yet to yield many results. Simply put, if Blinken arrives in the Caribbean with little to announce, frustration is likely to brew. 

Blinken’s visit must start an action-oriented agenda for the region. He should focus on two key areas of cooperation. First, the United States should work with multilateral development banks (MDBs) to provide access to low-cost and low-interest financing to high- and middle-income Caribbean countries. Second, Washington should provide requisite tools to local private sector businesses so they can play a larger role in the region’s own development.  

For the United States, the consequences of insufficient action so far are evident. Given the enormity of the challenges facing the Caribbean, the region’s leaders are seeking solutions to their problems elsewhere. Barbadian Prime Minister Mia Mottley has taken to the global stage to overhaul MDB financing, Guyana is welcoming investment in its oil sector from all corners of the world, and Trinidad and Tobago is increasing engagement with Venezuela over shared gas reserves. Other Caribbean leaders see African countries, India, and China as attractive partners that can provide financing, investment, and aid. 

This does not mean that US presence in the region will evaporate. The Caribbean’s proximity to the United States, strong trade relations, and a large US-based diaspora ties the partners together. But US government officials must realize that the United States will no longer be the only actor with which Caribbean leaders will engage. Therefore, if the United States wants to remain relevant in the region, now is the moment to deliver real solutions to the challenges facing its Caribbean neighbors.

A plan to amplify financial instruments

The first step should be working with MDBs, such as the World Bank and the Inter-American Development Bank, to amplify new financial instruments to support access to concessional financing for Caribbean countries. Most Caribbean countries are classified as high- or middle-income, which means that they are not able to access low-cost and low-interest financing from MDBs to fund needed infrastructure or social programs in times of crisis. Part of this work is ongoing, with the World Bank recently announcing a debt pause on loan repayments for developing countries hit by natural disasters. 

However, the pause only applies to new loans, not existing ones. Given the specific vulnerabilities of Caribbean countries, which extend beyond just the effects of climate change–induced events, the United States should work with MDBs to create a specific carve-out for small island development states such as the CARICOM countries. Hurricanes and other natural disasters pose significant risks to the Caribbean. But due to the small size and openness of their economies, so do other external events, such as pandemics, the volatility of commodity prices, and disruptions in supply chains. These external risks should be accounted for as well, because if another COVID-19 pandemic occurred today, Caribbean countries would still be on the hook for loan repayments. 

Charging up the private sector

The United States should also work closer with local businesses to embolden the Caribbean private sector. Big infrastructure projects in the Caribbean, such as roads, bridges, and new buildings, are mostly led by governments. The private sector is often left out, as local banks provide only limited financing or loans with high interest rates. This creates a vast asymmetry between government and private sector resources, with governments scoring political points from new infrastructure projects, while the skills, expertise, and capital that bring these projects to fruition result in little benefit for local companies. Foreign companies, therefore, reap the benefits, with returns on projects benefitting external actors rather than populations in the Caribbean, including the business community. This creates a dependency on the state to provide jobs, resources, and skills to citizens, meaning that the distribution of these resources is tied to the government of the day. 

To address this, the United States should create a US-Caribbean Public Private Partnership program that incubates small businesses in the region. The objective should be to train small businesses and transfer skills and technologies to local companies so that they can scale to a level where they are competitive in bidding rounds for upcoming projects. This is all the more important in the construction and energy sectors, as new climate-resilient infrastructure and energy systems are needed in the Caribbean now and going forward. The benefits would be twofold. First, a stronger and more robust private sector should strengthen and stabilize the region’s financial sector, making Caribbean countries less susceptible to volatility in global markets. Second, the larger the private sector, the more jobs will be available to citizens. This should stimulate domestic growth and create more diverse job opportunities outside of public service and the tourism industry—two sectors highly vulnerable to climate change and growing debt-to-gross-domestic-product ratios. 

It is a consequential moment for the Caribbean—its challenges grow worse each day. To survive the next few decades, it needs the support of its partners, including the United States. High-level visits alone will not suffice. To capitalize on the goodwill the United States has built in the Caribbean, Blinken’s trip should mark the beginning of an active policy toward the region. Working with MDBs and supporting private sector growth would be a giant step forward.  

Wazim Mowla is the associate director of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

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Security

Military camps for Wagner reportedly under construction in Belarus

Tracking narratives

Pro-Kremlin sources spreading disinformation to justify missile strike in Kramatorsk

Kremlin blames Colombian victims for the injuries they sustained in the Kramatorsk attack

Media policy

Prigozhin’s online assets reportedly blocked in Russia

International Response

Questions abound over the future of Wagner contracts and Prigozhin-linked businesses in Africa

Analysis: With Wagner mutiny, Russia’s loses plausible deniability about its involvement in Africa

Investigation sheds light on how Putin’s childhood friends allegedly evade sanctions

Military camps for Wagner reportedly under construction in Belarus

Russian independent outlet Verstka reported on the construction of camps for Wagner forces near Asipovichi, Mogilev Oblast, located in Belarus approximately two hundred kilometers from the Ukraine border. According to Verstka’s local forestry source, the area will cover 2.4 hectares (5.9 acres) and accommodate eight thousand Wagner fighters. The source also claimed that there will be additional camps constructed. Family members of Wagner fighters also confirmed to Verstka that they were deploying to Belarus. 

Radio Svaboda, the Belarusian-language edition of Radio Liberty, reviewed satellite imagery from Planet Labs that suggested signs of expansion at the Unit 61732 military camp adjacent to the village of Tsel, twenty kilometers northwest of Asipovichi. The outlet interviewed Ukrainian military analyst Oleg Zhdanov, who suggested it was “too early to tell” as to whether the military camp’s expansion is specifically for Wagner forces. “Very little time has passed to start building a camp specifically for the Wagnerites—it’s unreal,” Zhdanov told Radio Svaboda.

On June 27, in his first speech after the Wagner mutiny, Russian President Vladimir Putin reaffirmed the deal that ended the rebellion on June 24 in which Yevgeniy Prigozhin would relocate to Belarus. Putin praised those Wagner fighters who did not participate in the revolt and said they could sign a contract with the Russian Ministry of Defense of other services. He added that other mercenaries who do not want to join could go either home or follow Prigozhin to Belarus.

—Eto Buziashvili, research associate, Tbilisi, Georgia

Pro-Kremlin sources spreading disinformation to justify missile strike in Kramatorsk

Pro-Kremlin sources denied Russia targeted civilians when a missile struck a crowded pizza restaurant in Kramatorsk, killing at least twelve civilians and injuring more than fifty others. According to this narrative, RIA Pizza was actually a military base hosting US and Ukrainian soldiers. To support the claims, pictures taken after the strike were published on Telegram and Twitter.

To support the claim that soldiers of 101st Airborne Division were located at the pizza “military base,” pro-Kremlin sources circulated grisly footage of the attack aftermath recorded by freelance journalist Arnaud De Decker. The clip shows a man wearing a morale patch of a US flag with the words “Always Be Ready: 5.11 Tactical.” 5.11 Tactical is a military apparel company that sells branded merchandise, including morale patches, worn to offer support to various causes and slogans but not used official unit patches. Various types of 5.11 Tactical’s “Always Be Ready” patches are readily available for purchase online.

Similarly, another post from Aleksandr Simonov’s Telegram channel that a man wearing an 101^st Airborne t-shirt was a member of the US Army division. These t-shirts are also readily available from online retailers.

—Sayyara Mammadova, research assistant, Warsaw, Poland

Kremlin blames Colombian victims for the injuries they sustained in the Kramatorsk attack

In addition to pro-Kremlin accusations that the Kramatorsk attack targeted a base housing US Army soldiers, Kremlin influencers also targeted citizens of Colombia, three of whom were injured in the attack, for being at the site of the incident. Colombian President Gustavo Petro said the attack targeted “three defenseless Colombian civilians” in violation of the protocols of war and called for the Colombian Foreign Ministry to submit a note of diplomatic protest to Russia. While the Kremlin acknowledged launching the attack, it insisted the assault struck military personnel rather than civilians.

The three Colombian citizens injured in the attack include acclaimed Colombian writer Hector Abad Faciolince; Sergio Jaramillo Caro, who previously led Colombia’s peace negotiations with FARC rebels; and Ukrainian-based journalist Catalina Gomez. According to the New York Times, Abad and Jaramillo were in Kramatorsk “collecting material” in support of their initiative, ¡Aguanta Ucrania! (“Hang On Ukraine!”), which seeks to garner support for Ukraine in Latin America.

Following the attack, Colombian influencers and officials criticized the attack through media outlets and social media accounts in Spanish. Danilo Rueda, Colombia’s current high commissioner for peace, issued a statement expressing support for the victims without mentioning Russia, while the Ministry of Foreign Affairs expressed its “strongest condemnation of the unacceptable attack by Russian forces on a civilian target.” 

Gomez, who was injured in the attack, broadcast a video for France 24 from the site of the explosion. Meanwhile, Abad and Jaramillo conducted interviews with Colombian media outlets such as El Tiempo in which they described the incident.

Actualidad RT, a Russian media outlets with enormous reach in the Spanish-speaking world, insisted that the victims of the attack were mercenaries and instructors of NATO and Ukraine rather than civilians. Actualidad RT quoted statements from Igor Konashenkov, spokesperson for the Russian Ministry of Defense,  and Kremlin spokesperson Dmitri Peskov, who said the attack struck “military targets” and that “Russia does not attack civilian infrastructure.” Actualidad RT promoted its claims via Twitter and Facebook multiple times on June 28.

Colombian radio station WRadio interviewed Kremlin foreign policy spokesperson Maria Zakharova on the morning of June 28. Zakharova stated that the restaurant was a Russian military target and called for an investigation into Victoria Amelina, a Ukrainian writer who was gravely injured while purportedly hosting the Colombians at the restaurant, claiming without evidence that Amelina had prior knowledge that the restaurant was a military target. Zakharova reiterated this statement after a WRadio journalist asked her to confirm the accusation. In contrast, Abad stated that it was Gomez who suggested they visit the restaurant, and that she apologized for doing so after the attack.

The Russian embassy in Colombia amplified Zakharova’s narrative later that same afternoon and evening. On Twitter, the embassy insisted that the city was “an operational and logistical-military hub, not a suitable place to enjoy Ukrainian cuisine dishes.” It also seemed to celebrate that the “reckless trip [of the Colombians] did not turn into an irreparable tragedy.”

—Daniel Suárez Pérez, research associate, Bogota, Colombia

Prigozhin’s online assets reportedly blocked in Russia

Over the course of the thirty-six-hour Wagner mutiny, the Kremlin attempted to limit information about Yevgeniy Prigozin on Russian social media and search engines, eventually blocking websites affiliated with Prigozhin. On June 24, the Telegram channel of Russian state-owned propaganda outlet RT reported that several Prigozhin-controlled media outlets including RIA FAN, People’s News, and Patriot Media Group were no longer accessible in parts of Russia. RT added that the reason for their disappearance was unknown. Similar reports appeared in Mediazona and several Telegram channels. 

The DFRLab used the Internet censorship measurement platform OONI to verify the claim and check the accessibility of RIA FAN within Russia. OONI detected signs that riafan.ru was blocked in the country. 

On June 29, independent Russian outlet The Bell claimed the Kremlin was searching for a new owner for Patriot Media Group, which includes media assets associated with Prigozhin. The following day, multiple Russian outlets reported that Prigozhin had dissolved Patriot Media Group.

—Eto Buziashvili, research associate, Tbilisi, Georgia

Questions abound over the future of Wagner contracts and Prigozhin-linked businesses in Africa

For years, Wagner has acted as Russia’s primary form of influence in Africa—spreading disinformation and propaganda, securing military contracts, and exporting natural resources to support Putin’s war effort. Following Prigozhin’s attempted mutiny, the future of Wagner’s operations on the continent has come into question. While it is highly unlikely the Kremlin would willingly abandon its influence in Africa, if Wagner is retired or its troops absorbed into the Ministry of Defense, it is uncertain who would maintain the group’s operations on the continent.

Russian Foreign Minister Sergei Lavrov confirmed that Russia’s work in Africa will continue. In a TV interview with Russia Today, Lavrov said, “In addition to relations with this PMC the governments of CAR and Mali have official contacts with our leadership. At their request, several hundred soldiers are working in CAR as instructors.”

A top advisor to Central African Republic President Faustin-Archange Touadéra appeared unconcerned about the weekend’s events. Speaking of Wagner’s military instructors, Fidèle Gouandjika said, “If Moscow decides to withdraw them and send us the Beethovens or the Mozarts rather than Wagners, we will have them.” In a statement released to its Telegram channel, the Officer’s Union for International Security—a US-sanctioned Wagner front company operating in CAR—claimed CAR’s defense minister had apologized for Gouandjika’s remarks. It quoted Defense Minister Claude Rameaux Bireau as saying, “The people of the CAR are grateful to the Russian instructors of Wagner, ask any Central African on the streets of Bangui or in the village of the CAR—he will confirm my words.”

In Mali, where Wagner forces have taken over responsibility for pushing back jihadists after the departure of French forces, the online outlet Mali Actu reported that the situation could dramatically impact Mali. “This situation raises major concerns about the security, stability and sovereignty of Mali, as well as the impact on the local population and counter-terrorism efforts,” it wrote.

—Tessa Knight, research associate, London, United Kingdom

Analysis: With Wagner mutiny, Russia loses plausible deniability about its involvement in Africa

While Wagner’s future in Africa remains uncertain, it is important to consider that the Wagner Group not just a paramilitary force. It is also a conglomerate of companies active in different sectors, from mining and logistics to political warfare and moviemaking, able to travel the spectrum between private entrepreneurism to state proxy. This flexibility has previously allowed Moscow to deploy Wagner to act as a force multiplier in Africa while simultaneously denying Russia’s direct presence on the continent. In Africa, Russia has used Wagner multiple times as part of a strategy to help authoritarian leaders stay in power and gain a pro-Russian military presence on the ground, all while maintaining plausible deniability. Until now, the positive outcomes of this strategy have far exceeded the costs for the Kremlin, as Russia has built a strong network of African influence with relatively little effort, securing concessions in strategic extractive industries, and expanding military-to-military relations on the continent.

However, this principle of plausible deniability, which made Wagner so successful and so useful for Moscow as an extension of its foreign policy and influence, is now damaged. As previously noted, Russian Foreign Minister Sergei Lavrov, as well as Putin, publicly confirmed direct links between Wagner and the Russian state apparatus.

Africa is intimately linked to Wagner: In the wake of Wagner’s involvement in Syria, Africa became the scene of the group’s expansion. Engaging in Sudan, the Central African Republic, Libya, Mozambique, Madagascar, and Mali, Wagner employed an opportunistic strategy of supplying security while taking concessions to mine natural resources. While its forces were in most cases invited to stabilize fragile states, its actions actively invited further instability, creating more opportunities and a greater demand signal for its services, ultimately granting renewing opportunities to Moscow to reinforce its footprint in the continent.

While denying direct links to Wagner’s actions in Africa might have become more difficult for the Kremlin, Russia is unlikely to waste the network of influence built by the group in recent years. Instead, Moscow will likely continue to deploy hybrid tools such as Wagner, although organized in different shapes and forms, so Russia can continue displacing Western influence, exploiting natural resources, and evading sanctions through dozens of front companies.

—Mattia Caniglia, associate director, Brussels, Belgium

Investigation sheds light on how Putin’s childhood friends allegedly evade sanctions

On June 20, the Organized Crime and Corruption reporting project (OCCRP) published a series of investigations titled “The Rotenberg Files” that shed light on the business dealings and alleged sanctions evasion attempts of Boris and Arkady Rotenberg, close friends of Russian President Vladimir Putin. The report is based on fifty thousand leaked emails and documents, examined by journalists from seventeen outlets. The OCCRP said the leak came from a source who worked for the brothers at a Russian management firm. The OCCRP investigation was conducted in partnership with the Times of London, Le Monde, and Forbes, among others.

Boris and Arkady Rotenberg are childhood friends of Putin. The billionaire brothers faced Western sanctions amid Russia’s 2014 annexation of Crimea, but their lavish lifestyles do not appear to have been impacted. 

According to the OCCRP, the leaked documents demonstrate how the Rotenberg brothers allegedly used Western lawyers, bankers, corporate service providers, and proxies to evade sanctions. 

One of the report’s findings also alleges the brothers maintain business links to Prince Michael of Kent, a cousin of the late Queen Elizabeth II who was previously accused by the Sunday Times and Channel 4 of profiting off close access to the Kremlin. According to the latest investigation, “Prince Michael distanced himself from earlier ties to the Putin regime in the wake of the 2022 invasion of Ukraine. But leaked emails and corporate records show he co-owns a company with two Russian businessmen who helped billionaire oligarch and Putin ally Boris Rotenberg dodge Western sanctions.” 

Another investigation from the Rotenberg files reported that Putin’s eldest daughter regularly visited a holiday property financed by Arkady Rotenberg in an exclusive Austrian skiing destination. Documents reviewed by the OCCRP suggest that the house was purchased by a Cypriot company in 2013 with a loan from a bank then owned by Arkady, using funds invested by another company he owned. Other records suggested that the former romantic partner of Putin’s daughter is connected to the company that owns the Austrian property. Residents claim to have seen Putin himself at the Kitzbühel residence, though this has not been confirmed. 

The Rotenberg brothers and Prince Michael declined to comment to the OCCRP investigative consortium.

—Ani Mejlumyan, research assistant, Yerevan, Armenia

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The United States has reshaped how it uses military and economic tools to compete with China, Russia, and other adversaries. The United States is increasingly adept at deploying military assets, as well as a range of financial sanctions or trade deals, to weaken China or Russia’s position and advance its own. Yet, the United States has not calibrated all statecraft tools for this competition. This includes how and where it uses foreign aid.

For more than fifty years, foreign aid has been a core form of US engagement in the developing world. To advance its interests, the United States has provided loans, technical assistance, and direct budget support to developing nations to promote economic growth and more representative forms of governance.

A fully developed strategy for using foreign aid across all sectors—economic, education, security assistance, and democracy support—can provide critical reinforcement to the military and economic pillars of strategic competition. To be sure, the United States has reorganized parts of its bureaucracy and launched new initiatives to enhance how it uses foreign aid to compete with China. The US Department of State recently launched a new Office of China Coordination, informally known as China House, to coordinate China policy. The Biden administration announced a flagship Group of Seven Plus (G7+) initiative for the advancement of strategic, values-driven, and high-standard infrastructure and investment in low- and middle-income countries. Congress initiated foreign-aid funds dedicated to countering Chinese malign influence in foreign political systems.¹ New embassies in Vanuatu, the Solomon Islands, and Tonga, among other potential locations, are welcome developments that will provide the sustained presence necessary to engage governments and push back against Beijing’s influence, as well as help identify ways to use foreign aid to compete.

These changes are necessary, but far from sufficient to maximize the impact of foreign aid to compete with China and Russia. The power of foreign aid as a tool of US influence is not lost on its adversaries. The most prevalent example is China’s Belt and Road Initiative (BRI), through which the People’s Republic of China (PRC) has spent hundreds of billions of dollars for years to expand its influence in developing nations. Recently, China has increased BRI spending and shifted from its original focus on infrastructure megaprojects to the less capital-intensive, but still impactful, fields of governance (e.g., training elected officials in Beijing’s governance model); funding for academic departments to promote pro-Chinese narratives; green-energy projects; and funding for pro-China media outlets.² Under the BRI umbrella, China uses foreign aid in these and other sectors to promote policies and politicians favorable to PRC interests. The United States is, therefore, compelled to play a game of catchup.

Fully harnessing the potential of US foreign aid in this struggle requires fundamental reforms to the congressional processes involved in overseeing aid allocations and earmarks; reforms to bureaucratic agencies tasked with spending foreign aid; improvements to US modes for delivering this assistance; and a narrowing of scope to areas most critical for advancing US interests. Needed reforms include the following.

• Realign spending to focus on allies and countries strategically important to US competition with China and Russia, including reconsidering assistance mechanisms based solely on income level, with an aim of investing in allies and partners that advance US interests.
• Make delivering for allies and shoring up democracy core pillars guiding how the United States uses foreign aid to compete with China and Russia. Investments in strong democratic institutions—such as political parties, independent legislators, independent media, and civil society—will yield dividends in countering foreign authoritarian influence.
• Invest to empower pro-democracy elements in backsliding or authoritarian countries. The United States must respond asymmetrically in countries with pervasive authoritarian capture, using foreign assistance in ways that empower individuals and institutions to expose and put pressure on the regime elements that perpetuate corruption and enable foreign influence.
• Congress should pass legislation (the Non-Kinetic Competition Act) requiring the executive to submit multiyear plans outlining the US approach—harnessing all nonmilitary statecraft tools, including foreign aid—to competing with China in select priority countries.
• Focus on geography and interests, rather than sectors, to ensure maximum flexibility, strategies rooted in country-specific needs, and longer-term planning.
• Increase spending to expand partner-nation resilience to Beijing and Moscow coercion and cooptation. Strong democratic institutions increase a country’s ability to detect, prevent, and mitigate Chinese Communist Party (CCP) influence operations. Priorities should include support for independent media, parliamentary diplomacy, and educational and technical exchanges, all of which have proven effective at building democratic resilience to foreign authoritarian influence.
• Empower the State Department’s Office of Foreign Assistance Resources to fulfill its mandate of aligning foreign aid with policy goals and maximizing impact. Enabling the Department of State to take the lead on foreign policy and control aid allocations will ensure that aid is appropriately leveraged to advance specific foreign policy objectives.
• Lengthen the time horizon for US foreign-aid programs and objectives from a single year to ten. Democracy, rights, and governance programming—as well as initiatives in other sectors germane to competition—requires longer-term investment to develop strong and resilient institutions, political parties, and processes. US agencies and implementing partners need longer project times to maximize impact.
• Limit branding waivers. The United States benefits from populations and governments knowing who provides aid, and its marketing needs to reflect as much.
• Focus on advancing interests, rather than “localization” targets. The US Agency for International Development (USAID) and State Department should pursue partnership approaches best positioned to achieve US interests in the target country. In most, if not all, cases, this will involve working through international nongovernmental organizations (NGOs) that collaborate with and, as needed, build the capacity of local partners.

With the aim of encouraging the United States to more strategically use foreign assistance to advance its policy objectives, this paper outlines why the threat posed by China and Russia requires more than a kinetic solution, and why and how foreign aid is essential to winning this competition; the current US approach to foreign assistance—where it spends, on what, and via which bureaucratic mechanisms—and its strengths and shortcomings; historical lessons from using US foreign aid for strategic competition, principally during the Cold War, that are applicable today; and recommendations for reforming the US foreign-aid infrastructure, regulations, and approach to better position the United States to compete.

I. The authoritarian threat has no purely military solution

China and Russia are often portrayed as purely military threats that warrant entirely kinetic solutions. To be sure, US military deterrence through a strong Army, Navy, and Air Force—with nuclear capabilities as a foundation—will remain essential to strategic competition. Kinetic options are necessary, but not sufficient. Competition with China and Russia is playing out not only in the sea lanes of the Indo-Pacific or Ukraine’s battlefields, but in the halls of parliaments in developing nations, in efforts to influence the post-conflict political systems of war-torn countries, and at the United Nations (UN), where both China and Russia endeavor to reshape the liberal world order.

China’s primary threat to the United States is undoubtedly a military one. It is amassing weapons sufficient to invade Taiwan, and has expanded its blue-water navy with an eye toward rivaling, if not supplanting, US capabilities. Yet, the PRC is also using political and economic tools to expand its influence in developing states at the expense of US objectives.

The CCP is increasingly using economic leverage and elite capture to exert political influence, deploying information operations, party-to-party ties, and, in some cases, export of its authoritarian governance model to create favorable conditions in other countries that enable the PRC to advance its local and global interests. This includes extracting natural resources critical to its domestic production and economic growth, expanding military basing essential to Chinese military deterrence and expanded control, and coopting politicians who serve these ends and can be counted on to vote with China at the UN on issues ranging from criticism of human-rights violations in Xinjiang to the future of the International Telecommunications Union and global internet governance. Together, these tactics are corroding democratic governance and popularizing authoritarian governance in countries the world over.

The BRI has been the crown jewel in the CCP’s global influence campaign. Nearly one hundred and fifty countries from every region of the world have signed on to the BRI, presenting a significant opportunity for the PRC to exert economic and political influence on a regional and global scale.³ According to research conducted by the International Republican Institute looking at PRC influence across country contexts, “growing trade, financial, and business ties are the foundation of the PRC’s efforts to build influence in other countries’ politics.”⁴ The CCP strategically deploys economic dependence, leverage, and coercion, in addition to elite capture, to develop pro-PRC constituencies in partner countries and advance pro-PRC policies. Thus, the BRI fits into the CCP’s broader efforts to create a world safe for the party and its interests, which Chinese leader Xi  Jinping proposes achieving via three initiatives that collectively articulate the CCP’s vision for the globe, titled the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative.⁵

The Global Development Initiative (GDI) seeks to expand the BRI to advance “people-centered” development, China’s catchphrase for its model of development that prioritizes economic advancement at the expense of human rights. The GDI—and PRC promotion of it—is explicit in its rejection of “Western” definitions of development, which incorporate human rights as a core tenet.⁶ China has been rallying countries to join the GDI, with vague promises of PRC support to help them achieve their Sustainable Development Goals for 2030, with a focus on poverty and hunger alleviation and increased access to clean energy. The PRC has established a group of “Friends of the Global Development Initiative” at the UN, which counts some sixty members.⁷ The Global Security Initiative (GSI) is the CCP’s vision for building a new global “security architecture” rooted in the CCP’s definition—and model—of security and stability.⁸ With aims to increase CCP influence at the UN through increased funding and diplomatic engagement, the expansion of PRC training programs to military and police, and an expanded role serving as an arbiter in international conflicts, the GSI signals China’s intent to return to its self-avowed rightful place at “the center for the world stage.”⁹ Without naming the United States and Europe, the CCP through GSI makes clear that it seeks to provide an alternative model of alliances or “circle of friends” to counter US interests, with a particular focus on the developing world in Africa, Southeast Asia, the Middle East, Latin America, and the Pacific islands.¹⁰

The Global Civilization Initiative (GCI) is the PRC’s new framework for promoting its governance model globally, building on the foundational work of the International Liaison Department supporting political parties around the world. Whereas such party-to-party exchanges once sought to build the legitimacy of the CCP, they are now focused on advertising the value of the PRC’s system of governance more generally. The GCI formalizes this recent trend, emphasizing the need for respect for a plurality of governance models. Speaking at the World Political Parties’ Conference, organized by the CCP in March 2023, General Secretary Xi Jinping extolled the PRC’s model of “a better social system,” noting that China’s experience has broken the myth that “modernization=Westernization.”¹¹ Implicit in the GCI, with its calls for understanding “different civilizations’ understanding of values” and models, is an attempt to popularize the CCP’s model of governance and help it realize its vision of a revised global order with a CCP-led China as the central node of globalization and global governance in the decades to come.

Collectively, these three initiatives are part of China’s overall strategy to promote authoritarian solutions to the mounting challenges facing developing democracies. They have the potential to undermine the principles of liberal democracy that buttress the extant rules-based world order. For many developing countries, PRC investment and trade are an economic necessity. They are, however, never free of conditions, despite PRC claims to the contrary. Whether the terms mandate that PRC-financed infrastructure be awarded to PRC-based companies, eschew existing environmental standards, or subvert transparency and accountability disclosure terms on the contractual arrangements, PRC entities’ business and negotiating practices often have adverse effects on the recipient countries’ finances and political systems.¹²

From a security standpoint, China’s promotion of the concept of “indivisible security,” used to justify Russia’s invasion of Ukraine, and its “aims to reshape norms of international security to be favorable to China and other authoritarian regimes while delegitimizing traditional military alliances,” as the US-China Economic and Security Review Commission has noted, are deeply worrying.¹³ Moreover, its proclivity to export repression beyond its borders poses a serious threat to developed and developing nations alike.

China has utilized “public security” as an entry point for establishing overseas police stations in fifty-three countries around the world, providing an entry point for PRC law enforcement to engage in transnational repression and crack down on dissent and political expression among the Chinese diaspora.¹⁴ In countries with large diaspora populations, the CCP has also relied upon triads, or crime syndicates, to intimidate its critics and further its objectives at the local level. Moreover, politically, China’s promotion of its authoritarian governance model undermines good governance globally, fueling democratic backsliding and legitimizing the rise of authoritarian actors from El Salvador to Belarus.

All of this has the potential to undermine US interests on everything from internet governance to human rights, while undermining US global leadership. These tactics have dire consequences for the United States, yet the United States cannot effectively address them with purely military or trade/sanctions solutions. Military responses, whether ship deployments or arms transfers, do not help strengthen the institutions and civil society needed for countries to be resilient to PRC influence operations, or to build an alliance of democracies to counter a growing autocratic threat.

Like China, Russia poses a threat to US interests that cannot be countered with armaments or economic tools alone. Russia is squarely focused on winning its illegal war with Ukraine. Even so, we can expect Vladimir Putin’s regime will continue using a range of non-kinetic means to advance its interests in Europe, Latin America, Africa, and Asia. The Kremlin’s principal goal is to foster instability and undermine alliances that counter its influence regionally and globally. It deploys a mix of political, economic, and military tactics to divide and rule.¹⁵

In the political arena, the Kremlin directly interferes in other countries’ political and electoral processes. Russia tries to influence the political playing field to be more amenable to its interests, and to inject the Kremlin’s point of view into the political discourse. The Kremlin and its affiliated entities provide financial and other incentives to political parties and politicians willing to represent and advance favorable policies in national parliaments or international institutions. Such support can include legal and illicit campaign contributions, often made by organizations set up by Russia’s agents of influence, individuals linked to Russia and Russian businesses, or Russian organizations directly. According to a recent report by the US State Department, Russia has covertly given at least $300 million to officials and politicians in more than two dozen countries since 2014, with plans to transfer more.¹⁶

Russia also targets electoral processes. Russian hackers have been accused of interfering in many elections and electoral campaigns around the world. In the 2018 presidential election in Mexico, they were reportedly involved in the spread of false information aimed at discrediting candidates to stir up divisions and polarization among voters.¹⁷ Russia similarly deploys cyberattacks, internet trolling, social media campaigns, and intrusions into state voter-registration systems to undermine political and electoral processes and create confusion as people head to the polls.¹⁸

Economically, the Kremlin employs strategic corruption to coopt elites and create pro-Kremlin proxies in media, politics, and business to push its agenda. This strategy aims to influence debates, gain support, and shape legislation in the Kremlin’s favor. This tactic is particularly effective in countries with favorable views of Russia. It helps galvanize public support and weakens alliances that conflict with the Kremlin’s interests. The Organized Crime and Corruption Reporting Project (OCCRP), a group of investigative journalists, recently revealed an expansive Kremlin operation to bribe politicians and businesspeople in Europe.¹⁹ The International Agency for Current Policy, an informal group connected to Moscow, is behind the bribes, arranged payments, and all-expenses-paid trips to luxury resorts for numerous European politicians and investors to encourage pro-Russian political and economic actions.

Militarily, the Kremlin is deploying proxy forces like the Wagner Group to support authoritarian governments or provoke low-scale conflict across Africa, including in Mali and the Central African Republic.²⁰ Wagner Group security deployments across the continent have been at the forefront of Russian efforts to influence African politics, and have been accompanied by disinformation campaigns to advance Russia’s political and security influence.²¹ The Wagner Group has also led Kremlin efforts to develop a pro-Russia infrastructure across Africa. This infrastructure includes the Internet Research Agency troll farm to conduct disinformation campaigns, captured antidemocratic political elites, coopted companies that exploit Africa’s natural resources, and front companies posing as nongovernmental organizations.

Russia’s influence efforts around the world are supported by wide-scale propaganda and disinformation campaigns to delegitimize independent, expert journalism—and the very concept of truth—in the eyes of consumers, exploit fissures in democratic societies and exacerbate polarization in conflicted ones, undermine support for democracy and the West, and advance pro-Kremlin narratives and policies. One approach Moscow deploys are Russian-funded media outlets like RT and Sputnik. RT, formerly Russia Today, is part of a state-sponsored propaganda corporation that masquerades as a legitimate, Western-looking news and opinion-making outlet that produces content in seven languages.²² With almost $400 million coming from Russian state subsidies in 2022 alone, the company has hired Western journalists to mislead its viewers, and to make its false content seem credible to legitimate media outlets around the world. Another tactic Russia uses is fake media outlets and social media accounts to dilute legitimate media reporting and inject messaging that serves Russia’s strategic objectives. Social media have been a particularly powerful tool for Russia, whose agents have been creating tailored content to influence the beliefs of groups of voters and sway them away from anti-Russia political forces. 

The contours of this challenge—from Beijing and Moscow—make clear that military and economic tools are not enough for the United States to compete and win. Kinetic efforts cannot bolster partner countries against the malign influence of the CCP and Kremlin and the associated cooptation of elites. Military tools, either security assistance or indirect effects of deterrence, cannot shape the politics and development trajectories of partner countries so that they take forms more favorable to the prosperity of their own people and US interests.

Economic-statecraft tools are more amenable to these ends—and complementary to foreign aid—but still not sufficient. Trade deals can increase US economic competitiveness vis-à-vis China by bolstering the US industrial base through opening markets to US citizens and businesses. The United States can use trade deals as an incentive for potential allies to align with US interests over those of the PRC or Kremlin and to help countries reduce their economic dependence on China and Russia. The United States can use economic sanctions to punish countries or individuals for a range of behaviors—from repressing their citizens, as in Belarus, to invading Ukraine, as with Russia—with the aim of stopping said targets from continuing these actions. Moreover, the United States can use economic measures to build a collective economic defense against economic coercion, and to deter PRC and Kremlin economic aggression.

Foreign aid is a necessary complement to kinetic and economic tools. It cannot single-handedly address all challenges listed above, but can help lead to changes—like making a country’s governance systems more resilient to foreign interference—that benefit the United States at the expense of its rivals.

II. US foreign aid: Effective tool, dated toolbox

The United States has utilized foreign assistance to advance its geopolitical interests since the end of World War II, and introduced the Marshall Plan to secure Europe’s (and Japan’s) social and economic foundations in the face of Soviet expansionism and restive communist factions.²³ The United States continued to use foreign aid as part of its strategy of containment over the next four decades, providing valuable lessons for advancing US interests in a new age of competition.

Foreign aid (interchangeably referred to as “foreign assistance”) consists of money, technical assistance, or commodities the United States provides to another country to advance a common objective. US foreign assistance can be organized into three overarching categories based on intent of spending: economic and development assistance that addresses political, economic, and development needs; humanitarian assistance that supports disaster relief and emergency operations to alleviate suffering and save lives; and security assistance, which strengthens the capacity of the military and law enforcement in other countries.²⁴

Across these three categories, foreign-aid-funded initiatives can include training rural farmers in more sustainable harvesting techniques, helping construct roadways linking peripheral towns to urban centers, or deploying specialists to advise government ministries on economic or political reform options.

The throughline connecting the three foreign-aid types—and the variation therein—is that US taxpayer dollars spent to fund these initiatives help lead to changes in the target country that benefit US interests. For instance, spending to increase the capacity and independence of government institutions can enhance transparency and provide more favorable investment conditions for US companies.

Yet, the United States spends less than 1 percent of its discretionary budget on foreign assistance, which for fiscal year (FY) 2022 amounted to$52.76 billion.²⁵ Comparatively speaking, this is a small portion of the federal budget. For the sake of contrast, it is 7 percent of the military’s FY22 $777.7-billion budget, and is nearly the exact amount the Department of Defense paid for fewer than one hundred new aircraft in FY22.²⁶

Illustrating the overall downward trend in foreign-aid spending, the United States spends roughly 50 percent less on foreign aid today, as a portion of gross domestic product (GDP), than it did during Ronald Reagan’s presidency. The similarities in the challenges the United States faced in the 1980s and today—and the disparity in resources it is marshalling to address those threats—is stark.

The United States allocates foreign aid through several departments and agencies, with the main entities being USAID and the Department of State. President John F. Kennedy established USAID in 1961 to lead the implementation of US foreign aid. Through the 1970s, USAID provided emergency food assistance that helped avert famines and helped newly independent countries establish basic governing structures. In the 1980s, USAID assistance guided economic reforms across Latin America and other regions around the world, helping stabilize economies in the face of currency and debt crises. After the Soviet Union’s fall, USAID helped new countries transition from autocracies to nascent democracies. From 2000 onward, USAID has played a central role in combatting HIV/AIDS, addressing violent extremism in fragile states, and solidifying democratic gains from the immediate post-Cold War era. In 2004, the United States expanded the agencies responsible for allocating foreign aid by establishing the Millennium Challenge Corporation (MCC) and, in 2019, the International Development Finance Corporation (DFC).²⁷ These changes that foreign aid helped enable or cause have, directly or indirectly, benefited US security and economic prosperity.

What the United States has gained in scope and scale through this range of foreign-aid entities, it has lost in not having them unified by a common directive and mission for spending. The George W. Bush administration worked to address this drift by disbanding USAID policy offices, and transferred those associated oversight and policy responsibilities to a new Office of Foreign Assistance Resources at the Department of State. This change aimed to further align foreign-aid spending with foreign policymaking, which is the State Department’s purview (USAID, per a 1988 law, reports to the secretary of state). Despite this change, the United States continues to struggle with developing comprehensive strategies for issues and countries—and harnessing all elements of US foreign assistance (in tandem with other statecraft tools, like diplomacy and economic engagement) toward a common end. Some feel USAID operates too independently, and its spending is insufficiently aligned with US foreign policy objectives.

Why foreign aid is critical to strategic competition

A solid base of rigorous research shows that foreign aid is effective across a range of sectors in contributing to changes in recipient countries that favor the United States and advantage it in its competition with China, Russia, and other rivals.

Foreign aid can lead to three primary types of impact that are beneficial to strategic competition: economic development that opens markets to US businesses, which increases US economic competitiveness with China and Russia; stronger governance and political institutions, which can serve as a robust check on Russian and Chinese attempts to undermine or coopt allies or potential partners; and more favorable views of the United States by a government and/or its people, which the United States can then leverage for cooperation on mutually beneficial interests or against China and Russia.

Foreign aid supports US economic competitiveness by helping develop new economies for US businesses and trade. It does so by promoting a country’s overall development, as well as sound, transparent regulation.²⁸ Foreign assistance increases economic potential within a state, especially when developing basic industry, improving basic infrastructure, or rebuilding an area after conflict. Today, for example, eleven of the United States’ top fifteen trade partners are previous recipients of foreign aid. Access to overseas markets matters for people at home; roughly one in five US jobs is linked to international trade, and one in three US manufacturing jobs is linked to exporting US products overseas. When considering investments overseas, US businesses need predictable regulations managed by independent institutions, which, collectively, minimize risk of loss of capital. By fostering foreign markets for US goods and businesses, foreign aid can help bolster the United States’ industrial base.

Foreign aid also helps strengthen governance and democracy in countries around the world. A study of US foreign assistance focused on “democracy promotion” programs from 1990 to 2003 found that democracy assistance had “clear and consistent impacts” on overall democratization—as well as civil society, judicial and electoral processes, and media independence.²⁹ Despite a global democratic recession from 2012 to 2022, eight countries that were autocracies actually bounced back and are now democracies in 2023—with international democracy support and protection being an important factor in securing these gains.³⁰ The benefits of these changes, enabled by foreign aid, are clear. The world is safer and more secure with more—not fewer—democracies. Democracies do not launch wars against other democracies, are more reliable allies to the United States, and are far less prone to intrastate civil conflict.³¹ By strengthening independent institutions and civil-society oversight, foreign aid can help make countries more resilient to interference from foreign rivals like China and Russia. Robust institutions and vibrant civil society make it difficult for China and Russia to exert influence and coopt elites.

Finally, foreign aid can help improve citizens’ and governments’ views of the United States, often at the expense of its principal rivals. The long-term aspect is important here. Chinese and Russian foreign-assistance programs tend to favor physical projects that advance their economic interests and solidify partnerships with authoritarian actors.³² Populations, genuinely appreciative and benefiting from such investments, look favorably upon these efforts in the short term. Over time, there is growing evidence that these projects eventually begin to erode local support for Beijing and Moscow.³³ In the case of China, this is partially due to shoddy construction work, a feeling of Chinese neocolonialism and loss of sovereignty, and discomfort with authoritarian moves by parties in power. While there is much reporting on China’s BRI and Russia’s recent use of Wagner Group mercenaries in Africa, both countries’ programs lack transparency—increasingly alienating potential local partners as long-term consequences become more apparent.³⁴

By contrast, US foreign-assistance spending is transparent, involves clear conditions guiding where and how funds are to be used, and favors working with local partners to identify real needs and inform project design and implementation.³⁵ Well-implemented, effective, and large-scale initiatives focused on addressing pressing needs of populations—like the President’s Emergency Plan for AIDS Relief (PEPFAR)—solve problems for local populations and generate positive perceptions of the aid provider, the United States. Several studies find that US investments in PEPFAR foreign assistance (as one example) are strongly associated with improved perceptions of the United States across the globe.³⁶ A potent mix of project transparency, exposure to US government institutional practices and customs, and an earnest desire to help recipient countries prosper underpins US foreign aid’s impact and success.³⁷

III. Looking back to chart a path forward: Lessons from the Cold War

Today’s threat landscape is not analogous to the Cold War for several reasons: China and the United States are far more intertwined economically than the United States and Soviet Union; technological advances have minimized geographical advantages; and states and citizens are more connected, with a magnitude of information access that was unthinkable in the immediate post-World War II era.

Despite these differences, the period in which the United States was grappling with a seemingly mighty Soviet Union and today’s competition with China share some similarities. Today, like then, the United States faces an array of threats across military, social, economic, and political domains from a formidable power that kinetic tools alone cannot address; as a result, the United States is looking to harness all statecraft tools to its advantage. Three key lessons from how the United States used foreign aid during the Cold War can help inform how it uses this non-kinetic tool for strategic competition today.

To maximize foreign aid’s impact, strategic patience is essential. Foreign aid can produce meaningful outcomes, but changes can take years to occur.³⁸ It took a decade for the Marshall Plan and associated US foreign assistance to transform Western European nations into the staunch democratic-minded, market-oriented partners that they are today. While US foreign aid that began in 1948 helped prevent socialist uprisings across Europe, NATO integration and rearmament took the 1950s to accomplish.³⁹ The European Economic Community only truly began to develop in the 1960s.⁴⁰ And the dismantling of European colonial empires and the move toward the US view of the liberal order took until the 1970s to be fully realized.⁴¹

Beyond Europe, US foreign assistance to African and Latin American governments highlights how approaching regions with a longer-term perspective and approach provides opportunities to augment engagement when conditions become more favorable.⁴² Throughout the 1960s and 1970s, US work in both regions haphazardly shifted between supporting anticommunist militarism, encouraging economic liberalization and development, and improving living conditions.⁴³ Moreover, post-colonial struggles in Africa and regional interference from the Cubans and Soviets in Latin America limited the overall effectiveness of US foreign-assistance programs until the 1980s.⁴⁴ Previous US engagement then allowed it to become a preferred partner as the Soviet Union began to withdraw from the “third world” and the global financial order introduced new requirements for integration and development.⁴⁵

Just as foreign assistance takes time to generate outcomes, assistance strategies should have flexibility to adapt to changes in the country or region over the lifetime of a given initiative. Identifying an end state, and methodically working toward it over the course of years or decades, allows second- and third-order effects of investments to occur.

Second, policymakers need to be realistic about what foreign aid can achieve—and avoid overpromising and under-delivering. More often than not, success has been achieved when US policymakers used foreign assistance to secure practical and realistic outcomes. While often criticized for partnering with autocrats over the course of the Cold War, the United States’ incremental investments slowly eroded the Soviet Union’s theory of victory and allowed the United States to encourage democratic progress over time.⁴⁶ US foreign assistance supported strategic aims that ultimately led to a more peaceful, prosperous, and representative world.

A final lesson is that foreign assistance works best when it is part of a broader whole-of-government strategy.⁴⁷ When the United States synchronizes foreign-aid interventions, these efforts tend to build on each other to promote long-term cultural change and alignment with US interests and policy.⁴⁸ Some clear examples of whole-of-government success are Western Europe, Colombia, South Korea, and Chile.⁴⁹ Each of these examples shares a US assistance approach and series of programs that combined security guarantees with cooperation and reform programs; economic-development packages that paired investment monies with revitalization of key industries; social initiatives intended to soften cultural cleavages while improving social determinants of health; and incentives for local governments to improve their capacity, resiliency, and responsiveness. When foreign-assistance efforts remained siloed between agencies, efforts fell short and minimized impact of taxpayer dollars.

IV. Recommendations: Maximizing US foreign aid to compete

The United States has the infrastructure and expertise to re-elevate foreign aid as a tool of statecraft and use it to help compete with China, Russia, and other adversaries. Doing so will require making changes to where the United States spends foreign assistance and on what, and reforming structures within the US government that dictate how said funds are allocated. These changes are based on lessons from the past, as well as a sober assessment of today’s threat landscape and the need to position the United States for today’s challenges.

1. Where the United States allocates foreign aid and on what

The United States should realign spending to focus on allies and countries strategically important to competition with China and Russia. Foreign aid can help lead to changes in countries that advantage the United States in that competition (e.g., by making a country’s political system more resilient to Chinese or Russian influence), as well as address other pressing challenges (e.g., by addressing causes of migration in Central America to curb flows of people into the United States). Foreign aid can also be used to help US allies or countries of strategic importance in ways that maintain or cement extant alignment of interests (e.g., via infrastructure development that benefits the government in power) or help move a country that is on the fence between cooperating with China and the United States (e.g., Pacific islands).

The current approach to, and regulations governing, allocating foreign aid is not set up to enable the United States to use funds in ways that directly and efficiently advance US interests. It forces the United States to center spending in many aid sectors on predominantly low-income countries (where the perceived greatest development needs are) and disincentivizes spending on middle-income nations (with some plans in place to phase out spending in middle-income states), disregarding how important these nations, despite their income level, might be to the United States.

The Trump administration explored realigning how the United States uses foreign assistance of all stripes—from economic aid to health assistance—to make competing with China the primary objective. This realignment did not gain traction. However, the review elements that called for revisiting stipulations to spend based on a country’s income level—and instead center decisions around a country’s importance to the United States—are welcome and worth revisiting.

The United States should make delivering for allies and shoring up democracy core pillars guiding how it uses foreign aid to compete with China and Russia. The United States has rightfully increased funding for infrastructure projects in developing nations—along and through multilateral forums—to offer an alternative to China’s BRI. These projects, from highways to hospitals, help the United States compete with China because they buy goodwill with recipient governments and—given the transparent way in which they are managed—provide important investment to support countries’ development needs. But they only address one part of the China challenge, and do not address the root causes enabling Chinese interference and influence—weak governance and political institutions.

Strong democratic institutions are the most reliable form of defense against Russian, Chinese, and other external efforts to shape a country’s domestic politics to the benefit of the external actor. Political parties channel citizens’ views into policy and law. Independent legislatures and capable executives craft and enforce legislation that makes markets favorable to foreign (and US) investment, and inhibit the type of opaque deals favored by the PRC. Independent media play a crucial role in identifying and exposing harmful authoritarian influence, while civil-society organizations (CSOs) work to push governments to take corrective action. Across borders, a diverse group of activists, media figures, religious leaders, researchers, and policymakers is collaborating to confront the challenge of foreign authoritarian influence, forming a strong and growing network of likeminded individuals committed to building democratic resilience worldwide. This network is using innovative methods to uncover and bring attention to the harmful influence of authoritarian actors, such as the PRC and Kremlin. They are devising advocacy and policy solutions tailored to the individual needs of local communities, with the goal of promoting lasting change and ensuring accountability from domestic and foreign authoritarian actors. They need US support.

Invest to empower pro-democracy elements in backsliding or authoritarian countries. In democratically backsliding or authoritarian countries, the scope and scale of elite capture by the PRC or the Kremlin—and conditions on US foreign assistance over human-rights concerns and corruption—limit the potential for political change to build democratic resilience to foreign authoritarian influence. In such contexts, it is extremely challenging to compete symmetrically with the PRC or the Kremlin, which do not impose conditions related to human rights or democracy, and routinely end up worsening both. The United States must respond asymmetrically, using foreign assistance in ways that empower individuals and institutions to expose and put pressure on the regime elements that perpetuate corruption and enable foreign influence. Ongoing investments in media, civil society, and small “d” democratic political parties and opposition movements can sustain important pro-democracy elements to effectively push back against authoritarian influence, in closed and closing countries.

2. Congressional action

Given its constitutional role of oversight and resource appropriation, Congress has an important role to play in ensuring the United States maximizes use and impact of foreign aid in its competition with China and Russia.

Congress should pass legislation (the Non-Kinetic Competition Act) requiring the executive to submit multiyear plans outlining the US approach—harnessing all nonmilitary statecraft tools, including foreign aid—to compete with China in select priority countries. Absent congressional requirements or oversight, it is unclear if the executive branch will be able to swiftly make the needed changes outlined above to where and how the United States spends aid, including ensuring whether it is part of a broader strategy for each country. To accelerate these efforts, Congress could pass legislation requiring the executive to deliver plans for select priority countries, outlining how it intends to use all aspects of US power and resources—including foreign aid, linked to diplomacy—to compete with China. The strategies should include a clearly defined goal, as well as a theory of the case. The legislation could be modeled on the Global Fragility Act (GFA), which requires the executive to deliver a strategy for preventing violent conflict and promoting stability globally, and ten-year plans for achieving these aims in select priority countries. Unlike the GFA, however, the legislation proposed here need not require the executive to publicly release plans, given the sensitive nature of the content.

Focus on geography and interests, rather than sectors. US foreign aid is largely organized around sectors (e.g., health, education) and driven by congressional earmarks. This makes it exceedingly difficult for the United States to craft geography-specific strategies (e.g., for sub-Saharan Africa) with a single source of foreign aid as an available resource. Ideally, the United States would craft a competition strategy for a given region that clearly identifies an end state, theory of the case, and associated inputs required to realize it (kinetic and non-kinetic, including foreign aid). Instead, the current system predetermines (via earmarks) how the United States spends a significant portion of foreign aid (with some exceptions), forcing planners to use aid in suboptimal ways that seldom advance country-specific strategies.

Congress, considering its increased attention to position the United States to prevail against China, should review extant earmarks, do away with as many as feasible, help the executive conduct longer-term planning, and provide greater flexibility in using foreign aid to compete. The legislation cited below could help set parameters and ensure funds are spent on the highest priorities.

Increase spending to expand partner-nation resilience to Beijing and Moscow coercion and cooptation. Strong democratic institutions increase a country’s ability to detect, prevent, and mitigate CCP influence operations, but must be coupled with other work focused squarely on detecting, preventing, and countering CCP and Kremlin interference—whether attempts by the PRC to train political parties in Kenya on the China “model” or direct Kremlin funding to political parties to influence electoral outcomes and ensure pro-Kremlin voices are voted into office. Foreign assistance in this category can fund a range of programming, from technical assistance to countries negotiating BRI deals to support for independent media in countries vulnerable to foreign influence. Priorities should include the following types of democracy, rights, and governance programming, which have proven effective in building democratic resilience to foreign authoritarian influence.

• Supporting independent media: Supporting independent journalism can be a powerful tool in countering the influence of the PRC and Kremlin in the Global South. It is a wise investment of limited US resources to empower well-trained journalists in vulnerable countries, who can provide free and unbiased reporting to expose the impact of foreign authoritarian influence. Every dollar spent in this direction can make a significant difference.
• Legislative dialogues: In legislatures throughout the world, a growing number of elected officials are committed to democratic resilience. From engaging with partners like Taiwan and Ukraine to exposing concerns around the domestic impacts of deepened political and economic engagement with China and Russia, these officials have been successful in advocating for measures to counteract foreign influence and building global democratic unity to confront it. Facilitating and supporting such dialogues, by both the US Congress and parliaments globally, is a critical and effective means to counter PRC and Kremlin influence.
• People-to-people exchanges: China is making a significant investment in people-to-people exchanges, sponsoring fellowships, scholarships, and exchanges to showcase the China model across the Global South. This soft-power initiative is an area in which the United States has a strategic advantage; it just needs to leverage it. The exchange programs sponsored by the Department of State’s Bureau of Educational and Cultural Affairs are an effective mechanism for engaging youth, students, educators, artists, athletes, and rising leaders to promote US interests—and democracy. More than 99 percent of participants in the bureau’s Sports Visitors exchange program come away expressing positive views of the United States, while its exchange programs have brought almost seven hundred officials who would go on to run their countries’ governments to the United States. However, only forty thousand international participants engage in such programming annually, given the bureau’s $777.5-million annual budget for exchanges. By comparison, in 2018, the PRC provided scholarships to sixty-three thousand students to study in China, a figure that doesn’t include party-to-party exchanges run by the International Liaison Department or journalist and parliamentary exchanges. Additional investment in this area would be a cost-effective win-win.

The United States spends a paltry amount combatting Russian and Chinese malign influence around the world, despite this being the foremost challenge of the time. The United States spends less than $325 million a year countering Chinese influence and $300 million countering Russian influence via foreign aid. In fact, the $625 million the United State spends annually on this threat from China and Russia is less than the Defense Department spends on printing each year.⁵⁰

US policymakers argue that prevailing against China is a national imperative, but have only appropriately resourced its kinetic toolkit. Foreign-aid spending focused on this aim needs to increase fourfold, to $1 billion annually. It should center on countries already exposed to CCP and Kremlin interference, at the cusp of such interventions, or likely to experience them moving forward.

3. Intra-US government structural changes

Several changes to intra-US government processes and structure would help better align foreign-aid spending with core national security interests and increase its impact in the competition with China and Russia.

Empower the State Department’s Office of Foreign Assistance Resources to fulfill its mandate of aligning foreign aid with policy goals and maximizing impact. US foreign-aid spending should directly align with, and advance, US interests in priority states, competing with China and Russia chief among them. This means enabling the Department of State to take the lead on foreign policy and control aid allocations in a way that concretely advances specific foreign policy objectives, rather than a development goal that might be tangentially related to US interests. The secretary of state should empower the Office of Foreign Assistance Resources to truly lead on foreign-aid coordination and alignment, deputizing its director to ensure aid spending aligns with policy goals. The USAID administrator should continue reporting to the secretary. The United States needs to maximize the impact of foreign aid for immediate political wins and incorporate foreign aid into longer-term planning.

Lengthen the time horizon for US foreign-aid programs and objectives from a single year to ten. The United States used foreign aid to significant effect during the Cold War. Flexibility in what and how to spend, as well as the time horizon on which success was measured (noting the struggle with the Soviet Union was the central objective) were extremely important. In the last 15–20 years, and in line with shorter-term goals (e.g., health), the time horizon for gauging success has shortened to 1–2 years. This is counterproductive. Democracy, rights, and governance programming—as well as initiatives in other sectors germane to competition—requires longer-term investment to develop strong and resilient institutions, political parties, and processes. US agencies and implementing partners need longer project times to maximize impact.

Limit branding waivers. Projects or initiatives funded by US foreign aid typically are branded as “from the American people,” and include the funding agency’s logo (e.g., that of USAID) to enable attribution for the work to the United States. Yet, the United States often allows organizations implementing foreign-aid projects to forego this branding requirement—thereby granting a waiver—on security or other grounds. For example, an NGO offering training to local farmers in an area contested by militias known to have anti-American views might request a waiver citing potential risk to personnel from said armed groups. Similar exceptions are granted for construction or other projects in areas perceived to be contested or at risk. Meanwhile, there are hospitals, schools, trainings, and so on in the same areas with “from China” branding readily visible. The United States benefits from populations and governments knowing who provides aid, and its marketing needs to reflect as much. The United States should only issue waivers when said branding could pose harm to implementers or beneficiaries, or when it is counterproductive to achieving results.

Focus on advancing interests, rather than “localization” targets. Under current Administrator Samantha Power’s leadership, USAID has articulated a commitment to the localization of US foreign assistance. This includes, but is not limited to, channeling a greater portion of US foreign assistance to local partners and taking additional steps to ensure US-funded projects build sustainable capacity of these local organizations. The United States has considered requiring international nongovernmental organizations that receive the “primary” grant from USAID to allocate a set percentage—up to 20 percent—to go directly to local partners. The rationale for this change, which the Barack Obama administration shared, is that US foreign assistance should help build local capacity to address needs. The intent is noble, but this arguably detracts from US foreign assistance achieving its actual and main intent—advancing US interests.

Rather than set aside an arbitrary amount of foreign aid for channeling to local NGOs, USAID and the State Department should pursue partnership approaches best positioned to achieve US interests in the target country. In most, if not all, cases, this will involve working through international NGOs that collaborate with—and, as needed, build the capacity of—local partners. Foreign aid should focus on building capacity and localizing aid, insofar as doing so advances US interests.

Conclusion

The United States’ overall approach to statecraft—how it forms strategy and uses tools to execute that strategy—has not caught up to the state of the world today. The current approach too often places bureaucratic prerogatives above policy priorities. The United States needs to be on high alert, shaping all aspects of government work toward its competition with China.

Patrick Quirk, PhD, is vice president for strategy, innovation, and impact at the International Republican Institute (IRI) and nonresident senior fellow in the Atlantic Council’s Scowcroft Center for Strategy and Security.

Caitlin Dearing Scott is the director for countering foreign authoritarian influence at the International Republican Institute.

The authors would like to thank Owen Myers for his research assistance.

The Scowcroft Center for Strategy and Security works to develop sustainable, nonpartisan strategies to address the most important security challenges facing the United States and the world.

Learn more

The post Maximizing US foreign aid for strategic competition appeared first on Atlantic Council.

Sandra Torres, a well-known but polarizing figure in her third bid for the presidency, and Bernardo Arevalo, a congressman, first-time presidential hopeful, and former diplomat with a strong anti-graft message, have advanced to the second round, which will be held on August 20. The low voter turnout of 60 percent and high percentage of null votes—four times as high as in the last elections, making up nearly a quarter of all votes—reflect a prevailing sense of apathy among Guatemalan voters and an erosion of confidence in an electoral process that, to date, has been marred by seemingly arbitrary court decisions on candidates’ eligibility to run. For this cycle, political parties brought a record number of legal actions against each other, with at least three presidential candidates and other candidates for congress barred from running.

Nonetheless, Guatemala’s runoff election to replace term-limited Alejandro Giammattei will have far-reaching implications, both for the region and beyond. For one, Guatemala’s next president will be less ideologically conservative than the last three administrations in Central America’s most populous country. The emergence of more left-leaning governments is in line with trends from other recent elections in the region (Honduras, Chile, Colombia, and Brazil, for example).

The next president’s decision to align with China or maintain relations with Taiwan will reverberate beyond Guatemala’s borders. The outcome could determine whether the Biden administration has a reliable partner for its strategy in Central America—which is designed to help quell the surge of migrants on the US-Mexico border and to combat graft and corruption. And the economic challenges facing the country, including poverty, inequality, and fiscal deficits will require comprehensive policy measures and hard reforms from whoever takes office in 2024. That’s a tall order when considering the two candidates for the August runoff.

Geopolitical implications

Guatemala is host to one of the last two Taiwanese embassies in Central America (the other is in Belize), and one of only seven in Latin America and the Caribbean. The outcome of the runoff election has the potential to tip the region’s balance toward China once and for all, thus shaping the future trajectory of not just Guatemala but also the broader interests of the United States and the rest of the Western Hemisphere. China has been calling on Guatemala to make the “right choice” and has overtly increased its footprint in the region in the last few months—first through Honduras’ decision to break off ties with Taiwan in March and then with reports of late-stage talks for the establishment of a Chinese military training facility in Cuba. Despite this, leading candidate Torres has vowed to maintain diplomatic ties with Taiwan. Arevalo’s position is less clear. He has stated that Guatemala’s sovereignty and interests are most important and that there is no reason to “jump trains.” After all, China is Guatemala’s second-biggest commercial partner, behind the United States.

Closer to home, the runoff election results may determine the extent to which the next Guatemalan government is willing to collaborate with the United States to address matters such as irregular migration, corruption, and transnational crime. As a political insider whose party has been embroiled in several corruption investigations, Torres is seen as unlikely to take strong measures against suspected corruption within the party system. On the other hand, Arevalo is known as the anti-corruption congressman. His party—Movimiento Semilla—is all but a symbol of the 2015 “Guatemalan Spring,” which resulted in the resignation and arrest of then-president Otto Perez Molina. Arevalo announced on Monday that if he were to win the election, he would convene former judges and prosecutors to create a national anti-corruption advisory group. With increasingly unreliable allies across the region, the Biden-Harris administration’s ability to carry out its strategy toward Central America hinges upon the election of a trustworthy and dependable leader in Guatemala.

Economic implications

Guatemala is the largest economy in Central America, but with some of the highest rates of poverty and inequality in the region, as well as the lowest rate of tax collection in Latin America. While Torres would likely continue with a more conservative economic agenda focused on macroeconomic stability, market-oriented reforms, attraction of foreign investment, and fiscal discipline, less is known about Arevalo’s plan. The next president will also have to deal with a growing fiscal deficit and continued social demands. The president will need to work with a split Congress to pass budgets—the country failed to do so in 2020 and 2021, when protestors set the Capitol on fire—to support the population’s needs and continue to improve the country’s basic infrastructure. To address the low rates of tax revenue in relation to the size of the economy, the next administration will also have to undertake important reforms on the fiscal front.  

Should Torres win in August, she would likely pursue a robust social domestic agenda—she’s already promised bags of basic food items for the most vulnerable and cuts in taxes on basic foods. Meanwhile, Arevalo has floated the idea of a public hospital for cancer treatment and a state-owned enterprise that would create a network of pharmacies with medicines at “fair prices.” But his economic plan, which will need some refinement over the next six weeks, depends on the creation of “jobs, jobs, jobs”—the lack of which is a main driver of migration in Guatemala. Arevalo has laid out plans to bring Guatemala’s citizens into the formal economy while vowing to eradicate poverty and boost quality education. With increasingly few resources to finance the robust social programs these center-left candidates are proposing, breaking ties with Taiwan in favor of China could just make economic sense. This would be especially attractive if a landmark infrastructure project accompanied the announcement. For example, Costa Rica received a national stadium in 2011. More recently, El Salvador received a stadium and a library in 2019, and, following President Xiomara Castro’s announcement of breaking diplomatic ties with Taiwan this year, Honduras received a pledge for Chinese investment in a major hydroelectric dam project.

Guatemala’s voters will likely be most concerned with their pocketbooks when they head to the ballot box in August. Urban centers want a leader who will work to root out corruption—which could give Arevalo an edge. But their choice will reverberate far beyond the country’s borders and could reshape the geopolitical map in the hemisphere.  

María Fernanda Bozmoski is the deputy director of programs at the Adrienne Arsht Latin America Center.

Eva Lardizábal is an assistant director at the Adrienne Arsht Latin America Center.

The post As Guatemala’s voters signal a left turn, great powers are watching closely appeared first on Atlantic Council.

This is the 5th installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Meaningfully advancing the green agenda

The private sector identified the green agenda as a major opportunity, with more than half of survey respondents flagging “addressing climate change” as a top sustainable development and business priority to drive full economic recovery from COVID-19.¹ While climate action is critical on a global level, companies recognize that it is particularly pressing in LAC.

LAC is the world’s most economically unequal region and the second-most disaster-prone region in the world, highly vulnerable to climate consequences.² This vulnerability threatens to further entrench inequality and undermine the wellbeing of people and communities. Every year, between one hundred and fifty thousand and two million people in LAC are pushed into poverty or extreme poverty because of natural disasters, while as many as seventeen million people could migrate across LAC by 2050 due to climate change.³ Climate change also threatens food security, which can heavily impact rural communities.⁴ It will generate economic costs of up to $100 billion annually by 2050, which undercut growth and limit the ability of businesses to operate, prosper, and thrive.⁵

Recommendations for the private sector

Advancing the green agenda is not only imperative as a means of addressing the threat of climate change, but also as a means of unlocking massive business opportunities with the potential to drive private-sector-led economic recovery and growth in LAC. In particular, private firms have an important role to play by creating green jobs, promoting the circular economy, and partaking in green finance.

1. Creating green jobs: Firms can help create green jobs by adopting sustainable practices, seizing business opportunities in emerging green sectors, and providing upskilling, reskilling, and other support for workers displaced by the green transition.
2. Promoting the circular economy: Firms can help drive a transition to a circular-economy model by financing circular-economy efforts, supporting multistakeholder initiatives, and adopting and promoting sustainable business practices.
3. Partaking in green finance: The financial sector can help foster a green-finance ecosystem in the region by tightening environmental, social, and governance (ESG) requirements, aligning investments with green objectives, and nurturing green[1]bond markets in LAC.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

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• Executive summary
• Introduction
• Overview of key opportunities
• Conclusion
• Annex
• Interviews

Executive summary

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Introduction

Latin America and the Caribbean stand at a pivotal moment. Hard hit by the pandemic in 2020, the region managed an impressive rebound in 2021 on the back of successful vaccination campaigns and historically intensive fiscal support.¹ However, new uncertainties began to emerge by late 2021. LAC’s growth slowed to 3.5 percent in 2022, and is expected to further weaken to 1.7 percent in 2023.²

Inflationary pressures, rate hikes in both LAC and advanced economies, spillovers of the war in Ukraine, tightening fiscal positions, and still-high debt levels have dampened the regional macro-outlook.³ In addition, countries face structural micro-level vulnerabilities—such as rigid and informal labor markets and low productivity—which made LAC the slowest-growing region globally from 2014–2019 and the region worst affected economically by COVID in 2020.⁴

The above challenges—coupled with a lingering pandemic, a global food crisis and energy crunch, and the effects of climate events—are testing public finances and institutions. Much is at stake as governments seek to better serve the needs of their economies and societies. From sustaining the ongoing recovery against short-term headwinds to boosting inclusive, productive, and sustainable development in the long term, governments cannot, and should not, do it alone.  

In this context, the Atlantic Council’s Adrienne Arsht Latin America Center (AALAC) has partnered with the Inter-American Development Bank (IDB) to highlight the critical role of the private sector in supporting growth and improving lives in LAC. By working directly with IDB’s robust network of multinational private-sector partners through surveys and interviews, AALAC identifies and spotlights five opportunities whereby the private sector can drive economic prosperity, sustainable development, and social progress in LAC. 

1. Enhancing market size, scalability, and regional integration. The private sector can strengthen the hard and soft infrastructures supporting the region’s economies, while drawing them closer together through trade, regulatory, and other integration. 
2. Accelerating digitalization and innovation. The private sector can improve infrastructure, foster skills, and promote adoption to help the region transform its digital potential into development gains. 
3. Improving state governance, institutional capacity, and transparency. Technological, governance, and other cooperation between the public and private sectors can enhance institutional capacity, integrity, government-service delivery, and regulatory quality in LAC.  
4. Addressing multidimensional inequality. Private-sector actions to reduce gender inequality, level the playing field between SMEs and large firms, narrow the urban-rural divide, and prepare for global shocks will enable a more prosperous, inclusive economy for LAC. 
5. Meaningfully advancing the green agenda. Private firms can help advance the green agenda by working to create green jobs, taking measures to promote a transition to a circular-economy model, and partaking in green finance.  

In each opportunity area, the report provides recommendations private firms should consider to maximize their own roles in the region’s recovery and continued development, as well as by working through partnerships with the public sector. To inspire ways forward, such recommendations are accompanied by concrete, actionable examples of successful private-sector leadership and partnerships. 

Where applicable, the report also introduces relevant, complementary policy recommendations for the public sector by drawing primarily on research of the Americas Business Dialogue (ABD), a private-sector initiative facilitated by the IDB. ABD leverages the insights of more than four hundred companies to develop, disseminate, and support the implementation of sound public-policy recommendations. 

Partnerships at the IDB
The report is the product of a close collaboration between the Atlantic Council and the IDB. The IDB is the leading source of development financing for Latin America and the Caribbean, with a long track record of working in partnerships with the public, private, nonprofit, philanthropic, and academic sectors. Through its Office of Outreach and Partnerships (ORP), created in 2008, the IDB has managed to cultivate a robust network of partners, including private-sector firms dedicated to supporting the region’s development in partnership with the bank. The Atlantic Council engaged more than one hundred of these firms as part of the report-building process.

The IDB works with its private-sector partners in many ways, focusing largely on: capturing financing from partners to complement its operations in the region; mobilizing pro-bono knowledge, innovation, and technological solutions from partners that can generate impact in the region, in line with its institutional strategy; and engaging in knowledge sharing, dialogue, networking, and other activities through high-level partnership platforms. To date, the IDB Group has mobilized close to $52 billion from 500+ partners from the private, public and philanthropic sectors, including $5.91 billion in 2022.

Special feature: Private-sector perception of LAC
In addition to identifying the five opportunities of private-sector-led growth in LAC, this report provides a helpful snapshot of business attitudes toward the region, through a series of surveys and interviews conducted in May and July 2022 (see methodology in Annex A). Survey respondents—private-sector partners of the IDB—are predominantly multinational companies and represent fifteen sectors. Seventy-nine percent of these companies operate in two or more LAC countries and 65 percent employ more than four hundred people in the region. The survey yields two salient insights.

The first of these insights is that business leaders perceive the region through a spectrum of optimistic and pessimistic lenses. In brief, survey respondents are almost exactly split on whether the overall business and investment environments in LAC have improved over the last decade. The optimists, which make up 49 percent of respondents, consider the environments to be friendlier or much friendlier than in the past, whereas the pessimists (the other 51 percent) see stagnation or even deterioration in these conditions (Figure 1). Interestingly, the two groups are not defined by discernible differences in terms of the industries or subregions in which they operate, or in the demography of the respondent.



The optimism-versus-pessimism dichotomy reflects more than just two contrasting views of the region’s past trajectory. Rather, dissecting survey responses by optimists and pessimists reveals their respective underlying perspectives on LAC’s strengths and weaknesses—and, implicitly, their disagreements and surprising agreements. For example, while optimists are more hopeful about, and place greater emphasis on, LAC’s digital and innovation potential than the pessimists, optimists fully concur with pessimists that governance and institutions are top challenges facing LAC.

Comparisons like this—see numerous “additional survey insight” boxes throughout the report—add more nuance to the analysis, as well as the resulting, forward-looking recommendations. Although perceptions are hard to change, progress in the five opportunity areas outlined below will be key to tipping the balance of optimism and pessimism in LAC’s favor. This is important because perceptions guide decision-making: perceived risks and weaknesses can undercut investment, while a shift toward more optimistic views of the region can do the opposite.

Second, the survey displays a more favorable perception of LAC than common wisdom or an “international observer” might suggest. On one hand, reputable international assessments of business friendliness and competitiveness— conducted by organizations such as the Economist Intelligence Unit, the World Economic Forum, and the Institute for Management Development—tend to place LAC in the bottom half of all countries.⁵ On the other hand, our survey respondents—including the pessimists—see LAC as slightly more attractive than the global average (see Figures 2 and 3 below). ⁶ Despite the potential positive bias of our multinational survey respondents toward LAC, it offers hope that they suggest—in a global context—that LAC may have more to offer than meets the eye.

To further explore such varied perceptions of LAC, the report compares LAC to other regions through objective metrics, where applicable. More importantly, an obvious takeaway is that, going forward, the region needs to lower its “barriers to entry” and make its opportunities more accessible to everyone, whether knowledgeable observers or those who do not necessarily possess a deep understanding of local conditions. Effective and constructive public-private collaboration and dialogues, including those undertaken in preparation for this report, will be indispensable to rallying international optimism and attention in specific countries, and in the region in general.

Overview of key opportunities

Report Jun 5, 2023

Enhancing market size, scalability, and regional integration in Latin America and the Caribbean

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can strengthen the hard and soft infrastructure supporting Latin America and the Caribbean’s economies, while drawing them closer together through trade, regulatory, and other integration.

Americas Economy & Business

Report Jun 16, 2023

Accelerating digitalization and innovation in Latin America and the Caribbean

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can improve infrastructure, foster skills, and promote adoption to help the region transform its digital potential into development gains.

Americas Economy & Business

Report Jun 20, 2023

Improving state governance, institutional capacity, and transparency

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Technological, governance, and other cooperation between the public and private sectors can enhance institutional capacity, integrity, government service delivery, and regulatory quality in LAC.

Americas Inclusive Growth

Report Jun 22, 2023

Addressing multidimensional inequality

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Private-sector actions to reduce gender inequality, like level the playing field between SMEs and large firms and narrow the urban-rural divide, can enable a more inclusive economy for LAC.

Americas Inclusive Growth

Report Jun 26, 2023

Meaningfully advancing the green agenda

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Private firms can help advance the green agenda by working to create green jobs, taking measures to promote a transition to a circular-economy model, and partaking in green finance.

Americas Climate Change & Climate Action

Conclusion

When asked to identify the main social impact of their companies, survey respondents cited myriad promising areas. Unsurprisingly, the most commonly cited was economic growth and job creation (72 percent), as shown in Figure 11 a few pages ago. But LAC needs companies to consider their contributions far beyond output and employment, especially with the region confronting a number of additional short-term uncertainties and structural socioeconomic obstacles. As evidenced by concrete examples throughout the report, many firms have undertaken commendable efforts and rethinking in this regard. But more can be done. Going forward, the private sector would do well to step up as a leader—and a partner for the public sector—in boosting development, equity, resilience, and sustainability in LAC. This report explored how the private sector can rise to this challenge in a systematic and actionable way, through sixteen recommendations across five concrete opportunities (summarized below). Additionally, it explained why doing so also benefits firms, for those less convinced of the cause (or less optimistic about the region). This is particularly critical to further galvanizing private sector interests at a time when pandemic-induced scarring and other ongoing economic headwinds have eroded corporate revenues and suppressed cumulative investment in certain sectors.⁷ Even with fewer resources available, however, companies can make an impact through well-designed day-to-day operations, strategies, special programs, and partnerships. Finally, the private sector cannot, and should not, do it alone. The report highlighted success stories and the overall importance of multistakeholder partnerships (public-private, private-multilateral, private-civil society, etc.), as a way to complement private-sector actions and amplify developmental impact. On that note, this conclusion section offers some final thoughts and additional insights on how to stimulate public-private partnerships in particular, as well as the critical role of the multilateral sector to advance partnerships and private-sector-led development.

Special feature: Maximizing the potential of public-private cooperation
In addition to the private-sector opportunities and recommendations summarized above, the report showcased scores of successful partnerships with the private sector that helped magnify developmental impact. As governments pursue and expand these partnerships, a central question remains: how to ensure these partnerships are successful. The answer varies greatly depending on the nature of the collaboration (e.g., co-financing an infrastructure project versus developing vocational training with private-sector expertise). Nevertheless, insights from our survey shed light on this. See Figure 12 below.

Firms most commonly cited the two following factors as necessary for successful collaboration with the public sector: regulatory, procedural, and legal clarity (70 percent), and integrity and trustworthiness (70 percent). The next tier of requirements was related to the attributes of specific collaborations themselves: economic viability (60 percent), skilled counterparts (56 percent), and effective negotiation (54 percent).



Here again, interesting differences appeared between our survey’s optimists and pessimists. The latter—who showed greater skepticism of government institutions—are more likely to prioritize regulatory and legal frameworks and engage with trustworthy and honest counterparts. Optimists, meanwhile, focused more on the specifics of a given collaboration (in particular, economic viability). See Figure 13 below.

Ultimately, as with all relationships, successful public-private cooperation in pursuit of recovery and sustainable development in the region will depend on a shared vision for success, a clear sense of what each partner brings to the table, trust and communication, transparency and honesty, and a shared belief in the unique potential of multistakeholder partnerships to improve lives in the region.

Special feature: The role of the multilateral sector

Multilateral actors have a critical role to play in these partnerships. Indeed, many interviewees, including Telefonica, pointed to the multilateral institutions as key partners that can help private actors unlock their full potential to support the region’s development.

First, multilateral entities bring profound sectorial, country, and development expertise to partnerships. This knowledge helps ensure partnerships are designed in line with country and sector needs, that they respond to the realities on the ground, and that they are soundly implemented and carefully monitored to maximize impact.

Second, multilaterals are trusted partners of governments, civil-society actors, and private firms, and therefore can serve as a bridge connecting these diverse actors. This is particularly relevant in LAC, where trust in the public and private sectors is low, and where mistrust is a significant obstacle to development.⁸ As an honest broker, multilaterals can unlock progress and prosperity by convening and building trust among public, private, and civil-society actors, and by opening the hearts and minds of local partners and beneficiaries to the ways in which private-sector partnerships can improve the region’s environmental, social, and economic wellbeing. A salient example here is IDB’s leadership in convening public-private dialogue, through platforms like the Americas Business Dialogue, on diverse topics of strategic development importance. These dialogues have effectively fostered public-private-multilateral ties in the region and involved nontraditional stakeholders, such as MNCs, in the region’s development journey.

Third, multilaterals can play a supporting role to empower partnerships with the private sector, even without being directly involved in the partnerships themselves. For example, they can partner with governments to provide anchor investments or de-risking facilities that may crowd in the private sector. Their support of private-sector operations with a meaningful development impact creates significant demonstration effects for other private firms to follow. Their commitment to fostering domestic private-sector development lays the groundwork for private firms to thrive, generating opportunities for future partnerships.

Such financial and technical assistance is particularly important in today’s uncertain economic and political context. On one hand, multilaterals are well positioned to act as countercyclical lenders during credit crunches and other crises. On the other hand, the multilaterals’ focus on the long-term growth and competitiveness agenda helps induce similar behavior in the public and private sectors, which helps overcome certain short-termism (for example, caused by elections, protests, or political polarization) potentially counterproductive to ultimate development goals.

Finally, multilaterals are also well placed to extract and disseminate the lessons generated from partnerships and use them to inform future partnerships and public policymaking—an essential component and objective of this collaborative report between AALAC and IDB. Moreover, their robust government ties, network of stakeholders, and in-country presence facilitates the exchange and cross-pollination of know-how across different geographies and industries. Like MNCs, many multilaterals have extensive coverage and memberships across LAC. The IDB, for example, has physical presence across twenty-six countries in the region.

Annex

Interviews

Related event

Public Event Mon, June 26, 2023 • 2:00 pm ET

Unlocking development in LAC: What role and opportunities for the private sector

An in-person conversation on pathways for the private sector to boost regional development across Latin America and the Caribbean.

Americas Climate Change & Climate Action Economy & Business Energy & Environment

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post Unlocking economic development in Latin America and the Caribbean: Five opportunities for private-sector leadership and partnership appeared first on Atlantic Council.

This is the 4th installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Addressing multidimensional inequality

A fourth private-sector-led opportunity for accelerating socioeconomic development in LAC is tackling one of the region’s most long-standing issues: inequality. Inequality in LAC is multidimensional in that it affects a wide range of issues and population groups based on gender (recommendation 1 below), geography (recommendation 3 below), socioeconomic status, occupational sector, age, ethnicity, digital access, healthcare, and other factors.¹ Tackling these multidimensional and often interrelated inequalities can improve economic wellbeing. For example, evidence suggests that reducing gender inequality alone—in terms of lifetime earnings losses—could boost regional GDP by at least 8 percent.² Since these and other inequalities are often interconnected, mitigating them will often require a holistic approach.

Recommendations for the private sector

Tapping into the financing, expertise, and technological capabilities of private firms will be crucial to mitigating multidimensional inequality in LAC. Practical training, mentoring, capacity building, supply-chain integration, and other programs help bring new talent into the region’s workforce, expand business operations, and increase productivity in LAC. This will particularly benefit underprivileged groups such as women, SMEs, and rural populations, making LAC’s growth more inclusive and resilient against future shocks.

1. Addressing gender-based inequality: Companies must empower female professional advancements, e.g., by addressing constraints arising from caregiving and unpaid domestic work, or by providing skills, entrepreneurial, or other training for women.
2. Empowering SMEs: Larger firms can shore up SME competitiveness by facilitating access to financing, supply-chain integration, and capability-building opportunities.
3. Tackling place-based inequality: Public-private collaboration and investment can make rural areas more accessible to basic services (like water and Internet) and more economically productive, thus reducing the rural-urban divide.
4. Preparing for shocks: Employer-led relief initiatives not only serve to cushion the impact of financial, climate, and other shocks on the lives and livelihoods of employees, but fortify societal cohesion and broader economic resilience.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

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#ProactiveLAC: A digital future for regional prosperity

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The post Addressing multidimensional inequality appeared first on Atlantic Council.

This is the 3rd installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Improving state governance, institutional capacity, and transparency

The private sector has a strong opportunity to contribute to, and benefit from, a better business climate in LAC by partnering with governments to improve state governance, particularly in three areas: “regulation and institutional environment,” “political instability,” and “corruption.” Every survey respondent named at least one of these issues as a regional detriment, while 85 percent selected two, as seen in Figure 8. Several indices of governance, such as the World Justice Project’s Rule of Law Index, rank LAC below the OECD average for measures of accountability, political stability, and government effectiveness, among other indicators, and below the global average for rule of law.¹

Quality of government and respect for the rule of law—including transparency, accountability, and enforceability—are instrumental in improving effective delivery of public services, as well as creating a business climate that incentivizes domestic and foreign investment and supports private-sector development.

Recommendations for the private sector

Businesses in LAC can assist governments in combating institutional capacity and governance challenges. Private-sector know-how and technology, including digital and cloud-based tools, can streamline government-service delivery and improve user experience. Public-private collaboration on information access and analytics, regulatory issues, and integrity mechanisms can help expose graft, boost transparency, and establish best practices, while keeping citizens informed. Together, these steps can help mitigate the region’s trust deficit, cultivate an attractive business climate, and boost economic growth.

1. Improving digital-government services: Private-sector technology and expertise should be leveraged to optimize the provision of government services and boost trust in government.
2. Promoting information access and analytics: Firms and citizens can examine and disseminate governments’ open data in ways that enforce transparency and accountability in the public sector (for example, in public procurement).
3. Improving integrity and regulatory quality: Commitment by the private sector (and the public sector) is critical to enhancing governance in LAC, from combating corruption to improving regulations.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

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By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can strengthen the hard and soft infrastructure supporting Latin America and the Caribbean’s economies, while drawing them closer together through trade, regulatory, and other integration.

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Addressing multidimensional inequality

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To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Private-sector actions to reduce gender inequality, like level the playing field between SMEs and large firms and narrow the urban-rural divide, can enable a more inclusive economy for LAC.

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The post Improving state governance, institutional capacity, and transparency appeared first on Atlantic Council.

This is the 2nd installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Accelerating digitalization and innovation

When asked about areas where they see themselves making an important social impact, 47 percent of surveyed services firms selected “digital transformation,” making it the second most impactful area only after “economic growth and job creation” (as shown below in Figure 7). Indeed, the private sector can unlock the three enablers (infrastructure, skills, and adoption), thus helping the region materialize its digital friendliness into better digital outcomes. In particular, firms in the services industries (financial, telecommunications, and information technology) consider digital transformation a vital part of their responsibility and contribution to society.

Recommendations for the private sector

The private sector is well positioned to help LAC economies, governments, and citizens make the most of its digital-innovation potential. As employers, service providers, consumers, partners, and investors, companies can leverage an ecosystem approach to enhance digital infrastructure, skills, and adoption within and across countries, delivering better digital outcomes conducive to economic inclusion and competitiveness.

1. Improving digital infrastructure: Firms can help strengthen digital connectivity in LAC, both operationally (as information and communication technology (ICT) product and service providers and investors can help strengthen digital connectivity in LAC operationally and financially.
2. Fostering skills: Employers and employees should stay innovative and competitive in an increasingly digitized economy through upskilling, reskilling, and workforce-development programs.
3. Promoting adoption: Multinational corporations (MNCs) can accelerate digital development by undertaking internal digital transformation and spurring adoption among suppliers and other businesses within their entrepreneurial ecosystems.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

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This month’s topline events

G7 Unites on China. At a G7 summit meeting in Hiroshima, Japan, President Joe Biden and other democratic leaders came together on China, pledging to “derisk” without “decoupling” from China’s economy and agreeing on a coordinating mechanism to counter economic coercion and an initiative to diversify supply chains. The G7 also called out Beijing’s militancy in the Indo-Pacific and political interference in democracies, while making clear it was prepared to “build constructive and stable relations” with China. With European allies eager to calm tensions, Biden also indicated he expected a thaw in relations with Beijing, as US officials began a new round of bilateral meetings with their Chinese counterparts.

• Shaping the order. The summit’s success in projecting a common front on China could set the table for meaningful policy coordination between the US and its allies, particularly on economic issues. The prospects of a more unified approach appear to have garnered concern in Beijing, which summoned Japan’s ambassador to rebuke the G7’s effort to “smear and attack China.” But as highlighted by French President Emmanuel Macron’s recent visit to Beijing, the US and its allies still have a ways to go to coordinate efforts on engaging with the world’s second largest economy.
• Hitting home. America’s economy will be more secure over time if the US and its allies are able to reduce dependence on Chinese products in critical industries and limit Beijing’s ability to engage in economic coercion.
• What to do. Building on the momentum generated by the summit, the Biden administration should seek to formulate a common allied strategy for how to deal with China over the longer term.

Ukraine Gets F-16’s. With Ukrainian president Volodymyr Zelensky traveling to Japan to join the G7 leaders summit, President Biden indicated that the US had agreed to allow allies to deliver US-built F-16 fighter planes to Ukraine and will participate in a joint effort to train Ukrainian pilots. The move comes as Russian forces appeared to take full control of Bakhmut, ending a monthslong battle for the eastern city and constituting Russia’s first battlefield victory in nearly a year. But the success may be fleeting, as Ukraine prepared for the launch of a major counteroffensive operation.

• Shaping the order. Biden’s decision on F-16’s marks another major shift on weapons support that could substantially bolster the ability of Ukrainian forces to push back Russian forces, though it will be several months before Ukrainian pilots will be able to use the planes in combat. More broadly, Zelensky’s appearance at the G7 summit served as a further demonstration of democratic solidarity and an indicator for how significantly relations with Russia – once a member of the G7 (then the G8) – have deteriorated.
• Hitting home. Americans will be safer if Ukraine succeeds in standing up to Russia’s aggression and flagrant assault on its democratic neighbor.
• What to do. The Biden administration should work with allies to expedite the training of Ukrainian pilots and facilitate the delivery of the F-16’s, while also reconsidering its position on providing ATACMS, the longer range missile system that could also bolster Ukraine’s ability to succeed.

Arab League Welcomes Assad.  After years of diplomatic isolation following his use of chemical weapons and commission of widescale atrocities against civilians to crush a popular uprising, Syrian President Bashar al-Assad was warmly received by Saudi crown prince Mohammed bin Sultan and other Arab leaders at an Arab League Summit in Jeddah. The move comes as Assad continues to consolidate his grip on power, while Saudi Arabia and other Gulf states enter a rapprochement with Iran.

• Shaping the order. The Arab League’s normalization of relations with Assad – a murderous dictator responsible for the deaths of thousands of innocent civilians – is a demoralizing setback for efforts to advance a rules-based, democratic order. Assad’s resurrection appears to be part of a global trend of welcoming authoritarian leaders back from the cold, as Venezuelan dictator Nicolas Maduro was invited by Brazil to participate in a South American leaders summit, sending the message to autocrats that violent repression ultimately pays dividends.
• Hitting home. The rehabilitation of autocrats like Assad undermines American values and US interests in a stable and prosperous world order.
• What to do. The US and its democratic allies should stand together in opposing Assad’s reintegration into the international community, and maintain sanctions and other efforts to ensure that Assad is ultimately held accountable for his actions.

Quote of the Month

“Russia’s aggression against Ukraine… has shaken the international order… [Japan] has a mission to uphold the free and open international order based on the rule of law, and to demonstrate to the world its determination to fully defend peace and prosperity.”
– Japanese Prime Minister Kishida, speaking at the G7 Summit in Hiroshima, May 21, 2023

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order    

Democracy (↓)

• Syrian President Bashar al-Assad was given a warm welcome at an Arab League Summit in Jeddah, after years of diplomatic isolation following his use of chemical weapons and commission of widescale atrocities against civilians.
• After facing his biggest election challenge in over two decades, Turkish president Recep Tayyip Erdogan won re-election amidst a campaign process marred by pro-government media bias, limits on free speech, and other obstacles on the opposition.
• Venezuela’s authoritarian leader Nicolas Maduro was invited to participate in a summit of South American leaders in Brazil, as Brazilin president Lula de Silva joined Maduro in criticizing US sanctions against Venezuela.
• Overall, the democracy pillar was weakened.

Security ()

• President Biden agreed to allow NATO allies to deliver US-built F-16 fighter planes to Ukraine, while pledging US participation in a joint effort to train Ukrainian pilots.
• The US signed a new defense cooperation agreement with Papua New Guinea – the largest island nation in the Pacific – that will deepen security ties between the two nations, as Washington seeks to counter China’s rising influence in the region.
• In a show of solidarity, Chinese President Xi Jinping told visiting Russian Prime Minister Mikhail Mishustin that Beijing will maintain “firm support” for Moscow’s “core interest.”
• The US accused South Africa of secretly supplying arms to Russia, despite the country’s professed neutrality on the war in Ukraine – a claim South African leaders initially denied and then promised to investigate.
• Russia and Belarus signed an agreement formalizing the deployment of Russian tactical nuclear weapons in Belarus, a move that appears intended as a warning to the West as it steps up support for Ukraine.
• On balance, the security pillar was unchanged.

Trade (↑)

• The US and its G7 partners agreed to establish a new coordinating mechanism to counter economic coercion and launch a new initiative to diversify supply chains away from China, while pledging to “derisk” without “decoupling” from China’s economy.
• The US and Taiwan reached a trade and investment agreement in an effort to liberalize and deepen economic ties between the two nations.
• China signed a free trade agreement with Ecuador, as Beijing looks to deepen its economic ties and influence in Latin America.
• G7 leaders agreed to new economic sanctions against Russia for its war in Ukraine, and the US announced a slate of new measures to restrict Russian trade. The UK followed suit, announcing a ban on Russian diamonds.
• On balance, the trade pillar was strengthened.

Commons ()

• G7 Leaders released a Clean Energy Action Plan, providing commitments across seven specific areas, including promoting clean energy technologies, with goal of reaching net-zero emissions by 2050 and limiting global temperature rise to 1.5 degrees Celsius.
• A joint report by the United Nations’ Food and Agriculture Organization and World Food Programme contends that, unless immediate action is taken, acute food insecurity will likely be exacerbated over the next six months.
• The World Health Organization declared an end to the COVID-19 global health emergency, marking an end to one of the most deadly and devastating pandemics in modern history.
• On balance, the global commons pillar was unchanged.

Alliances (↑)

• Meeting in Hiroshima, President Biden and his G7 counterparts reaffirmed their solidarity to support Ukraine “for as long as it takes,” as Ukrainian President Volodymyr Zelensky joined the summit in-person. G7 leaders also came together on China, pledging to counter economic coercion and voicing opposition to Beijing’s militarization of the Indo-Pacific.
• President Biden joined leaders of the Indo-Pacific Quad – US, Australia, India, and Japan – for a summit in Hiroshima, resulting in a joint pledge to cooperate toward a region where “where all countries are free from coercion” – an indirect reference to China.
• US Secretary of State Tony Blinken traveled to Oslo for a NATO foreign ministers meeting to discuss potential security guarantees for Ukraine, including the possibility of NATO membership, though allies remain divided on the issue.
• Overall, the alliance pillar was strengthened. 

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order     

• Liza Tobin, in Foreign Policy, argues that US policy toward China should be reoriented to achieve what should be American’s long-term goal of a democratic China.
• Emile Hokeinam, in Foreign Affairs, suggests that Syrian president Assad has turned a weak hand into a winning one, and that the Arab embrace of Assad will only encourage more brutality.
• Soner Cagaptay, in Foreign Affairs, opines that President Erdogan’s victory in the Turkish elections could solidify Turkey’s shift from an illiberal democracy to a Putin-style autocracy.

Action and analysis by the Atlantic Council

Our experts weigh in on this month’s events

• Fred Kempe, in Inflection Points, contends that the drama of US debt ceiling negotiations underscores the enduring promise of America’s global leadership and the growing perils of its decline.
• Dan Fried and Aaron Korewa, in the New Atlanticist, explore the potential for Poland to serve as a leader in Europe amidst the ongoing political turmoil.
• Ash Jain was quoted in Foreign Policy on US efforts to win over countries in dealing with China, by not talking about China.
• Joslyn Brodfueher and Zelma Sergejeva, writing for the Atlantic Council, highlight the potential to fortify NATO’s unified front against Russian aggression as the alliance prepares for its upcoming summit in Vilnius.
• Matthew Kroenig, in Foreign Policy, suggests that even Machiavelli preferred democracy over tyranny, because democracies have stronger political institutions that provide the source for greater national power and influence.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Ash Jain – Director for Democratic Order
Dan Fried – Distinguished Fellow
Soda Lo – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email AJain@atlanticcouncil.org.

The post State of the Order: Assessing May 2023 appeared first on Atlantic Council.

This is the 1st installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Enhancing market size, scalability, and regional integration

Latin America and the Caribbean’s market size and scalability make it an attractive environment for businesses, but the public and private sectors have an opportunity to strengthen its appeal further through deeper regional integration. Private-sector leadership and participation will be crucial for efficiently improving hard and soft infrastructure for trade, energy, and other forms of integration. Together with public sector efforts, these improvements will help pull more nearshoring and reshoring investment to the region.

Recommendations for the private sector

The private sector, in coordination with the public sector, has a key role to play in scaling regional potential and furthering regional integration in trade, climate, digitalization, and other areas. Three promising opportunities for private sector action in this space include:

1. Financing and managing hard infrastructure: Competitive construction, services, and other firms can help boost the cost and operational efficiencies of physical infrastructure underpinning LAC integration (achieved through intraregional trade, energy, etc.)
2. Improving “soft” infrastructure: Private-sector expertise and actions can inform and spur regulatory modernization and harmonization in LAC and internationally, which helps attract investment conducive to regional integration.
3. Prioritizing nearshoring and reshoring efforts: Firms across a wide range of sector may contribute to, and benefit from, better integrated regional supply chains and subsequent export gains.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

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The post Enhancing market size, scalability, and regional integration in Latin America and the Caribbean appeared first on Atlantic Council.

1. At an Atlantic Council event in Washington less than six months ago, Lasso declared that Ecuador “has fully returned to democracy.” What is the impact of this decree on Ecuador’s democratic institutions?

Ecuador’s constitution is unique in that it allows the president to dissolve congress in three instances. In this case, Lasso’s reasoning is that his actions are warranted under the third instance: “political crisis and internal commotion.” From his perspective, this is true since congress began impeachment proceedings to remove him from office on May 16. From the opposition’s viewpoint, represented by Rafael Correa, a former Ecuadorian president who currently lives abroad, it is Lasso who is creating internal commotion. Importantly, the decree ensures that new elections must be held for president and congress. Already, Ecuador’s armed forces and national police have been clear that personnel will respect the constitution, which does allow for dissolving congress under Article 148.

—Jason Marczak is the senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. 

It is very important to clarify that this movement by Lasso to activate the “muerte cruzada” is defined by Article 148 of Ecuador’s constitution. It will basically dissolve the National Assembly and call for new elections in six months’ time. This election includes the president and vice president positions. He will not acquire total governing powers. The only laws that he can expedite during these six months are executive decrees on economically urgent laws that have to be sanctioned by the constitutional court.

—Felipe Espinosa is the executive president of Cámara de Comercio Ecuatoriano Americana (AMCHAM).

The decision made by Lasso once again highlights the significant challenge of protecting democracy in Latin America. While the decision is in accordance with Ecuador’s constitution and a response to internal political complexity, the effective functioning of democracy relies on a balanced distribution of power. Governing through decrees diminishes one of the crucial checks on power—the National Assembly.

—Fernando Larraín is a nonresident senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center.

2. Is there anything Washington can or should do to respond?

Ecuador has become one of the United States’ closest partners in the hemisphere over the last few years. In December 2022, just days before Lasso met with US President Joe Biden at the White House, Congress approved the bipartisan United States-Ecuador Partnership Act—historic legislation given its singular focus on advancing the bilateral relationship in areas such as economic and commercial ties, the environment, and security. Congress has since then taken additional action. In March, Senators Bob Menendez (D-NJ) and James Risch (R-ID) have again led legislation focused on the bilateral partnership with the introduction of the Innovation and Development in Ecuador Act of 2023, which would include Ecuador in the Caribbean Basin Economic Recovery Act.

The last six months have again reinforced the focus on Ecuador among many in Washington. What is needed now is continued support and vocal messages across the US political spectrum reinforcing the importance of the democratic process and for stability in Ecuador at a time in which the streets may erupt at any point.

—Jason Marczak

The United States should have a continuous policy toward the region to enhance democratic values and institutions. Only economic prosperity in the region will guarantee that the people there view the rule of law and other long-term institutions as the solution instead of populist offerings. Poverty and inequality are never good advisors, more so when you talk about values with people struggling to make a day-to-day living. This mandate requires a long-term commitment of the United States to its allies in Latin America, through economic and social programs and support for trade.

—Felipe Espinosa

3. How do you see Lasso’s “rule by decree” tenure playing out?

Lasso’s decision to govern by decree is poised to embark on a challenging journey, with its overall impact yet to be determined. Upon invoking Article 148 today, he also introduced his first decree law, effectively reducing taxes and offering much-needed relief to Ecuadorian families. Additionally, Lasso is likely to push forward with labor reform and investment reform, both of which have long been stalled in congress. These reforms have the potential to bring positive impacts to Ecuadorian families by addressing crucial aspects such as hourly employee compensation, part-time work, and fair wages. While these reforms are likely to take place, the road ahead will be tumultuous. 

As expected, many members of congress do not align with Lasso’s decision to govern by decree, and it is likely that supporters of the impeachment will voice their discontent on the streets of Ecuador, potentially leading to protests similar to those witnessed in June and July of last year. The possibility of such protests, capable of paralyzing the Ecuadorian economy, adds complexity to Lasso’s governance under the “rule by decree” strategy. Navigating this challenging environment may overshadow the potential benefits these reforms can bring. 

—Isabel Chiriboga is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

4. Why does this matter for the United States? What are the implications for broader hemispheric stability?

Ecuador’s stability matters far beyond the country’s borders given its role as an important US partner. Ecuador made a clear decision a few years ago to strengthen its relationship with the United States. The hemisphere is thus looking at how that decision affects the country’s trajectory at a time of growing competition with China.

—Jason Marczak

Over the years, Ecuador has emerged as a strong US partner in the hemisphere, maintaining a close alignment with the United States amid shifting government ideologies across the region. However, the ongoing political crisis in Ecuador, fueled by pressing concerns such as inequality, insecurity, and the government’s struggle to address the basic needs of its citizens, raises concerns about the relevance of the United States in the region. Once seen as an example of economic stability, Ecuador will now face uncertainty as it approaches presidential elections in six months. In general, the United States finds itself with diminishing influence in Latin America. This situation creates an opportunity for broader Chinese influence to gain traction in the region. As Ecuador’s political landscape evolves, it becomes crucial for the United States to reassess its approach and take meaningful steps to maintain and strengthen its ties with Latin American countries.

—Isabel Chiriboga 

It is worth noting that Ecuador’s neighboring countries are grappling with greater internal political challenges, suggesting that the impact of this decision may not extend beyond Ecuador’s borders. Nevertheless, we can expect months of uncertainty, which will inevitably influence investment decisions and the financial market in Ecuador as governance dynamics are affected. In the upcoming months, Ecuador will undergo a political process where the focus may shift from addressing citizen concerns to matters of political power.

—Fernando Larraín

The post Ecuador’s president just invoked ‘mutual death’ to avoid impeachment. Here’s why it matters. appeared first on Atlantic Council.

Despite many observers’ initial beliefs that the new constitution would align with the governing coalition’s left-leaning political ideologies, the final tally of the May 6 vote showed a strong swing to the right, with nearly two-thirds of the available seats going to center-right and far-right candidates. 

The far-right Republican Party, led by former presidential candidate José Antonio Kast, secured twenty-three of the available seats, granting the party veto power over constitutional articles. Alongside the eleven seats won by traditional right and center-right parties, the collective influence of right-leaning council members exceeds the crucial threshold of thirty-one votes (or 60 percent) required for approving constitutional clauses. While an alliance between the Republican Party and other right-leaning factions remains uncertain, there is a strong likelihood of these groups working together.

So, will the council agree on a new constitution? Hopefully yes. But it will also need to deliver one that is then approved by the majority of voters. In short, it is in the Republican Party’s best interest that the draft constitution does not solely embody conservative values. Absolute veto power and the ability to approve clauses by allying with traditional and center-right members of the constitutional council means that the elected members could create the constitution they want. But if the document they produce ends up being rejected in December, the party loses its opportunity to lead the process, a prospect that is unlikely to happen again. 

Moreover, voters are watching this closely as a test case for how Republicans might govern. The optics of the party successfully delivering a democratically accepted legal charter would grant the Republicans a distinct advantage over left-leaning parties and could be regarded as the cornerstone for their campaigns in the upcoming 2024 mayoral and 2026 presidential elections. These factors make it imperative that the Republican Party remains open to compromise.

The results of the election also present a dilemma for left-leaning Chilean President Gabriel Boric and his administration, particularly as their approval rating continues to decrease. How do they continue to govern considering the country’s legal charter will almost certainly be more right-leaning than they anticipated? Will they continue working to build alliances with the right or reinforce their existing posture? 

In a region that is struggling with the challenges of polarization, democratic backsliding, corruption, and violence, Chile’s positive trajectory in the constitutional reform process demonstrates the importance of fostering consensus. The first attempt at reform by a left-leaning constitutional convention, deemed the world’s most progressive constitution, was rejected by voters. A shift toward unity would serve as a powerful testament to the strength of Chile’s institutions and Boric’s commitment to democracy, transparency, and representation. Failing to do so could stagnate the constitutional reform process and impede Chile’s advancement as a democratic and economic frontrunner in the region. Such a scenario would not only diminish investor confidence, but also foster distrust in the regulatory environment that has thus far enabled businesses to operate confidently in the country. 

On the other hand, more than three years after the Estallido Social took to the streets, Chileans have become increasingly detached from the constitutional reform process. After the first attempt at reform was rejected in 2022, the Chilean Senate and Chamber of Deputies appointed a panel of experts to compose a revised proposal. This will next be reviewed and approved by the constitutional council, thus limiting the involvement of the general population in the document’s drafting process.

Similarly, the issues that Chileans identified as the country’s most pressing problems in 2019—such as pension and health care systems—have fallen off the radar in favor of crime, inflation, immigration, and drug trafficking. With these day-to-day issues taking the spotlight away from systemic concerns, people in Chile have shifted their attention away from the constitutional process.

The constitutional council will meet for the first time on June 7 and will begin discussing the fourteen-chapter draft proposal written by the expert commission. On December 17 the final document will once again be presented for a national plebiscite, enabling Chileans to cast their votes and determine the approval or rejection of the new constitution.

The right-wing members of the new constitutional council have an opportunity that should not be missed. Delivering a non-polarizing constitution that is approved in December is in everyone’s best interest but will not be achieved unless the majority members compromise on conservative values to create a constitution that works to the benefit of every member of society.

Ignacia Ulloa Peters is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

The post Chile’s right is in the driver’s seat for creating a new constitution. Can it succeed? appeared first on Atlantic Council.

Chile is one of the highest-volume lithium producers in the world, producing 26 percent of global supply in 2021, and possesses the world’s largest proven reserves. With the energy transition underway and demand for the metal estimated to increase by 450 percent through 2050, the country is uniquely positioned to benefit from a technologically and commercially mature lithium industry that, to date, has struggled to grow. 

While the nationalization of resources in Latin America regularly raises alarms within demand centers and investor groups, Chile has demonstrated success in nationalizing its other abundant mineral resource—copper. Codelco, Chile’s state-owned copper company, has high technical expertise and standards with its main issues deriving from its misfortune of declining resources, not from mismanagement. Chile currently ranks thirty-fourth and thirty-third on the Atlantic Council’s Freedom and Prosperity Indexes, respectively, reflecting its institutions’ strong commitment to transparency, accountability, and integrity in economic, political, and legal spheres. While Codelco’s past success could steward the creation of Chile’s state-owned lithium business, there is limited precedent that this approach could benefit other industries. 

Opponents of the initiative argue that the move could jeopardize foreign direct investment in lithium development in the country and ‘kill the golden goose’ for Chile’s economic diversification. However, the decision to nationalize could deliver overdue clarity and provide transparent foundations upon which industry development can proceed, providing businesses and investors with a degree of certainty for future operations and arguably more predictability than had existed previously. Boric has stressed that no existing contracts will be altered without being the “fruit of an agreement” with SQM or Albemarle, the two existing lithium mine operators—and that existing contracts will otherwise be respected. 

This announcement extends beyond national economics. Boric’s administration designed the proposal to directly address longstanding grievances, such as inequality and water rights, that were highlighted during Chile’s Estallido Social in 2019. While Chilean state-owned enterprises have a complicated history concerning the well-being of local communities, this plan’s priority and primary purpose is to ensure that the population benefits from the lithium boom. 

For instance, Chilean Minister of Mining Marcela Hernando announced that private companies that want to take advantage of lithium must do so by direct lithium extraction (DLE) and not through brine evaporation, a system that involves an ecologic loss of two million liters of water for each ton of lithium carbonate produced. This comes in direct response to Chile’s decades-long drought, which has led to anxiety from local communities, particularly in the Atacama Desert, regarding lithium brine extraction’s intense water use. Interestingly, DLE technology companies have said that state support could prove beneficial for growing this technology in Chile’s lithium operations.

Provided that the national lithium company will partner with private lithium firms already operating, this initiative is also set to enhance the public-private partnership model, which according to the administration is key to the successful implementation of the national lithium strategy. In fact, it is necessary to include the private sector in this venture, as the process of identifying reserves, as well as progressing from brine to lithium carbonate—the product that is exported—is technologically intensive. The expertise and infrastructure of existing private-sector enterprises will be a continuing feature of Chile’s lithium industry for the foreseeable future. 

In this scenario, the United States has the unique opportunity to collaborate with Chile to make the most of its natural resources while identifying ways to establish regional supply chain partnerships. As one of the United States’ free-trade agreement partners in the region, Chile represents a strong partner to promote the diversification of supply chains for raw materials associated with the manufacturing of electric vehicle batteries, in line with the goals of the Inflation Reduction Act. 

More broadly, Chile has the potential to participate as a valued partner in creating a more robust, diverse, and resilient global supply chain ecosystem as the new energy system develops. To realize this vision, Washington should not treat Chile’s nationalization of lithium as an impediment, but rather distinguish it from other nationalization trends in the region. Engagement with Chile in building this partnership should focus on maximizing the value of the country’s resources. By the same token, Chile’s inclusion in these partnerships will be part and parcel of ensuring that it feels it is obtaining the best deal from its resources for its economy and citizens, a precursor for obtaining the political consensus for its lithium industry to bring critical supplies to global markets. 

Existing mechanisms such as the Americas Partnership for Economic Prosperity and the Minerals Security Partnership present ideal fora to engage with Chile through remaking those supply chains. These channels can be utilized to facilitate private-sector-public-sector interactions between lithium industry participants and the government of Chile as well as the new national business. 

Chile’s national lithium strategy, if successful, could serve as a model for natural resource exploitation across the region. However, it is too early to extrapolate this historically successful approach of nationalization from mining to other industries. Such international collaboration, and facilitation of public-private partnerships, may yet facilitate the sustainable and equitable development of this particular industry that has struggled to scale.

Ignacia Ulloa Peters is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

William Tobin is a program assistant at the Atlantic Council Global Energy Center, where he focuses on energy and climate policy.

The post Lithium drives the energy transition. Will Chile’s plan to nationalize production be a speed bump? appeared first on Atlantic Council.

Despite facing mounting opposition since taking office in August, Petro hopes to consolidate his government’s program with this new lineup announced on April 26. The reshuffle boots seven ministers from the administration, including market-friendly Finance Minister Jose Antonio Ocampo and the ministers of health, interior, transportation, agriculture, communications, and science. The question now is whether this surprise shake-up will prove to be a defining moment in Petro’s presidency or serve as a nail in the coffin for parts of his wide-ranging domestic agenda, which includes sweeping proposals for health, labor, and pension reforms. The stakes are high and come just as the United States and Colombia are trying to find ways of working together to coordinate on a range of issues—both inside Colombia and across Latin America.

At the top of the agenda is Venezuela. On April 25, Colombia hosted a high-level summit on Venezuela meant to widen the international consensus in support of political talks to resolve the country’s long-standing political and humanitarian crisis. Despite some friction, the conference highlighted the potential for US-Colombia collaboration on Venezuela—with implications for other regional diplomatic priorities in the future. While close coordination with Colombia could potentially advance US priorities across the hemisphere, this progress won’t come easily. It will largely depend on Colombia’s ability to navigate the current challenges with stability.

The conference came about after a White House meeting between US President Joe Biden and Petro on April 20. The two presidents discussed key issues in the bilateral relationship, such as counternarcotics, security, and US assistance. But in their joint statement, it’s also clear that the two leaders found a surprising amount of common ground on broader areas such as climate change, migration, and perhaps the leading human-rights issue in the Americas today: the crisis in Venezuela.

Colombia followed up the White House meeting by hosting high-level diplomatic delegations from twenty countries across the globe. The conference saw diverse participation, including EU foreign policy chief Josep Borrell, Brazilian presidential advisor Celso Amorim, and other leading decision makers from Europe, Latin America, and elsewhere. While Colombia’s decision to invite representatives from South Africa and Turkey raised eyebrows, this did not dissuade the Biden administration from sending a high-level delegation to the meeting, including Deputy National Security Advisor Jon Finer, Special Presidential Advisor for the Americas Chris Dodd, National Security Council Senior Director for the Western Hemisphere Juan Gonzalez, and Deputy Assistant Secretary of State Mark Wells.

While the conference was held in private, remarks afterwards by Colombian Foreign Minister Alvaro Leyva (who survived the cabinet shakeup) identified three points of consensus.

1. A solution to Venezuela’s crisis requires a timetable for free and fair elections. With presidential elections in Venezuela meant to occur in 2024 and legislative and regional elections slated for 2025, the focus of the international community is on ensuring competitive electoral conditions. This will not be easy given ongoing persecution of opposition candidates, widespread corruption, and Venezuelan leader Nicolás Maduro’s control of state institutions. In this sense, Borrell’s presence was significant. The European Union Electoral Observation Mission that oversaw regional and municipal elections in 2021 had significant access to Venezuela’s electoral authority on the ground. Its twenty-three recommendations make up a framework for the path to free and fair elections moving forward.
2. Negotiations to resolve the crisis are an urgent priority—and implementing a humanitarian accord is the best chance to build momentum. In 2021, the Maduro government and the opposition signed an ambitious plan in Mexico City to begin negotiations to resolve the country’s political crisis, aimed at electoral and judicial reforms. While the parties continue to negotiate in Caracas, progress in this process has been intermittent. In a breakthrough agreement in November 2022, the parties agreed to create a joint committee to channel an estimated three billion dollars in funds frozen by US sanctions to provide humanitarian assistance to Venezuela. This fund, to be overseen by the United Nations, is meant to prioritize health care, malnutrition, and restoring basic infrastructure. However, implementation is lagging behind. For example, the United Nations has not yet created the fiduciary fund five months after the agreement, claiming that it lacks clarity on navigating US sanctions. This international consensus in support of implementing the humanitarian fund is a sign of buy-in for the idea of building momentum based on existing accords.
3. Agreements should be paired with clear US offers of sanctions relief in order to incentivize progress. In its readout on April 25, the White House made clear that it had spelled out a step-by-step approach for such progress, “where concrete actions toward restoring Venezuelan democracy, leading to free and fair elections, are met by corresponding sanctions relief by the United States.” Existing financial and oil sanctions give the US significant leverage, since Maduro is desperate for access to resources amid an ongoing economic crisis. It remains to be seen, however, whether the Venezuelan government can be incentivized to provide significant political agreements that may ultimately threaten its hold on power.

The fact that these three points emerged out of the conference is significant—but it was especially significant that Colombia signed on. Previously the Petro administration had issued mixed messages on Venezuela, voicing vague concerns on human rights while moving to normalize diplomatic and trade relations with Maduro. Indeed, Petro has been more comfortable talking about the impact of US sanctions than about authoritarianism, human-rights violations, and crimes against humanity in Venezuela. In Leyva’s remarks after the conference and in some of Petro’s comments after his meeting with Biden, the Colombian government’s position appears to have shifted to include a clearer emphasis on the need to pair sanctions relief with progress towards free and fair elections.

There are limits to US-Colombia coordination on Venezuela. The uncertainty and instability surrounding the Colombian government inspired by the recent cabinet shake-up and the government’s inconsistent messaging on other areas of prior consensus, such as the Trade Promotion Agreement with the United States, limits its credibility. Additionally, the Petro administration is focused on negotiations with the National Liberation Army (ELN) to secure peace in Colombia, making it hard for Petro to take a bold stand against the Maduro regime, unless the United States offers significant support on this front. 

Colombia’s decision to expel former Venezuelan opposition leader Juan Guaidó, who was recognized by the United States as interim president until his mandate ended in January, did not gain the Andean country many points either. Guaidó arrived unexpectedly in Colombia on the eve of the conference. Rather than using the opportunity to recognize his contributions to the search for a democratic solution, the Colombian government wasted no time in ensuring that he made it on a plane to Miami. In doing so, the Petro administration generated unnecessary noise, raising concerns about their commitment to denouncing persecution and distracting from wider opposition support for jumpstarting negotiations.

Despite the friction, Colombia’s decision to host this conference—and ultimately to shift its position on Venezuela to be more in line with US priorities—represents an important step in exploring the future of diplomatic cooperation between Washington and Bogotá. This holds important lessons for other shared interests, including climate and migration policy, areas where the two countries have identified opportunities for future collaboration.

Geoff Ramsey is a senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center. Ramsey is a leading expert on US policy towards Venezuela and has traveled regularly to the country for the last decade.

Isabel Chiriboga is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center, where she contributes to the center’s work on Colombia, Mexico, and the Andes.

The post What’s going on in Colombia? A guide to Petro’s cabinet shake-up, Venezuela summit, and future US collaboration appeared first on Atlantic Council.

This article was originally published in Spanish by El Heraldo de Mexico. An English translation of the article is included below.

As the war in Ukraine enters its second year and the cold war between the United States and China intensifies, it is interesting to see how other countries begin to adjust their security policies.

There are relative changes, often imperceptible when they occur in isolation, however, in concert and with context, these changes say a lot about the rearrangement of world geopolitics.

On April 4, Finland officially became the 31st member of the North Atlantic Treaty Organization (NATO). It is expected that the integration of the Finnish military forces into the NATO command and control system will be easy, thanks to the fact that Finland was part of the “Partnership Interoperability Initiative.”

That program establishes deep connections between NATO and non-member countries that allows them to establish systems and processes that facilitate cooperation. Countries like Australia, Georgia, Jordan, Ukraine, and Sweden are also members of that initiative.

Finland’s accession doubles Russia’s land border with NATO, but the military alliance not only gains territory from which to reinforce the alliance’s northeastern flank (and the Baltics), it also gains an ally with a significant military force, technologically advanced and with a historic grudge against Moscow.

Let’s remember that Finland was invaded by the Soviet Union in November 1939. At that time, Moscow feared that Finland would be used by Germany to attack the city of Leningrad (today Saint Petersburg).

At that time Finland was not a member of any alliance, but still managed to hold off the Soviet forces for months, in what was called the Winter War. In March 1940 Finland signed the Treaty of Moscow in which it ceded 11 percent of its territory to the USSR.

Together with Finland, Sweden applied to join NATO in May 2022, but remains waiting for Turkey to accept it. Under NATO rules, all member countries must approve the entry of new allies. Turkey requires Sweden to implement reforms to go after the funding networks of the Kurdistan Workers’ Party (PKK), an armed separatist movement branded as terrorist organization.

NATO’s Secretary General is confident that Sweden can be formally admitted to the alliance in July. This confidence emanates from the polls that put the main political rival of Turkish President Erdoğan, Kemal Kılıçdaroğlu (KK), 12 points ahead in the upcoming elections on May 14. KK announced that, if he wins the presidency of his country, he will lift the political veto on Sweden to join NATO.

On the other side of the world, in North America, Mexico, Canada and the United States carried out the NAMSI PACEX 2023 naval exercise off the coast of Manzanillo at the end of March. Fortunately, despite the current political rhetoric, the Secretary of the Navy (SEMAR) maintains a bond of cooperation with its partners, both of which are NATO members.

The spirit of these exercises serves to facilitate cooperation and interoperability between naval forces. It would be worthwhile for the Mexican armed forces to explore additional options to increase their interoperability capacity, so that when political resistance fades, Mexico has the option of formally and relatively easily integrate into the geopolitical camp of free democratic countries.

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1. Why does this meeting matter for the US-Colombia relationship, and what did each side come away with?

The Biden administration understands the historical importance of Petro’s presidency and recognizes the election of a progressive leader as an indication of the institutional advances made over the last twenty years. Petro should be pleased with the meeting, as he wanted to speak of his focus on decarbonizing the economy and addressing the narcotics question in a different manner. Both sides had a chance to express their views and to have them heard respectfully. That’s a success.

—Kevin Whitaker is a nonresident senior fellow at the Adrienne Arsht Latin America Center and former US ambassador to Colombia.

For the United States, this was about broadcasting the importance of the relationship with Colombia. Despite occasional disagreements with the Petro administration, the Biden administration wants to show it is willing to work with him on issues like climate change and trade while they continue to hash out thorny issues such as counternarcotics. Biden’s announcement of a five hundred million dollar commitment to the Amazon Fund is a significant gesture, which—while not limited to Colombia—suggests that the United States may engage with some of Petro’s proposals linking climate change with rainforest protection.

—Geoff Ramsey is a senior fellow at the Adrienne Arsht Latin America Center.

Thursday’s meeting advanced the longstanding ties between the United States and Colombia in a way that can only be done through a presidential visit to the White House. Biden and Petro clearly found deep common ground on combating climate change, in addition to economic development and migration. For a relationship historically centered around security and counternarcotics, the readout of Thursday’s discussion showed the importance of adding new issues such as climate change to the bilateral agenda. As with any relationship, there will be sticking points—and much concern has been raised by some US policymakers on Petro’s peace and counternarcotics plans—but the White House meeting was a win for both leaders to reinforce the extent of the common ground.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

2. Did the two leaders make progress on Venezuela?

Biden and Petro spoke about Venezuela and about Colombia’s role in advancing negotiations between the Maduro government and opposition. While the Venezuelan parties have not publicly reached new agreements since announcing a major three billion dollar humanitarian accord in Mexico City in November, the process is still active. Mexico has now become a kind of clearing house for finalized agreements, not a host of technical talks—which are ongoing and quietly taking place in Caracas. When Colombia hosts an international conference on Venezuela next week, its ability to coordinate with the United States and other allies to refocus attention on negotiations will be put to the test.

—Geoff Ramsey

The public statements were certainly consonant with one another, and the photos seemed to show some chemistry between the two leaders.  On Venezuela, Colombian Minister of Foreign Affairs Álvaro Leyva’s earlier comment that sanctions relief could come only after there was material progress towards free elections is consistent with the US view. Colombian leadership on Venezuela can be a welcome element in the government-opposition talks, which appear stuck. Next week’s meeting in Bogotá will be important in making clear how the Colombian government’s influence can help give the Venezuelan people a real opportunity to state their views through free elections.

—Kevin Whitaker

3. What are the tension points in the relationship, and how did we see those play out on Thursday?

The readouts were as important for what they didn’t say as what they did say. While the salience of the cocaine trade is less in the US now than in the past, thanks to the emergence of the new scourges of fentanyl and synthetic opioids, there are many stakeholders here concerned with the explosive growth of coca/cocaine coming from Colombia and the absence of a clear and executable plan for controlling it.

Separately, while both presidents seem to agree on the need to move away from hydrocarbons, the reality is that both nations’ economies and budgets are dependent on those extractive products. The US “all of the above” approach, implemented step by step, is frustrating to leaders like Petro, who advocate more dramatic steps.

—Kevin Whitaker

While we saw some signs of cooperation on climate change and US-Colombia economic ties, there is still daylight between Biden and Petro on counternarcotics. Coca cultivation and cocaine production have skyrocketed in recent years in Colombia, but in the context of this visit the leaders seem to have agreed to disagree for now. Behind the scenes there are ongoing conversations about the future of US-Colombia cooperation on drugs and security. Moving forward we’ll likely see a middle ground that incorporates US concerns while also getting at the Petro administration’s interest in addressing the root economic causes of coca cultivation in impoverished rural areas.

—Geoff Ramsey

Security policy and the counternarcotics strategy of the Petro government represent a sharp contrast from his predecessor. The challenge will be to figure out a plan moving forward that is acceptable to both sides of the aisle in Washington and that speaks to the desire of Petro and those who elected him to have a different approach to achieving the same shared goal of reducing illicit coca cultivation. Petro is speaking to the concerns of those in rural areas of Colombia who ultimately just want to improve their livelihoods and to find a sustainable, long-term path to move out of poverty.

—Jason Marczak

4. How important is this partnership in the regional context? What impact can the US-Colombia partnership have on democracy promotion?

Petro, Chilean President Gabriel Boric, and Brazilian President Luiz Inácio Lula da Silva all are presidents of the political left who struggled to achieve power through institutional means in systems they believed tilted against them. The fact that all did so, within the system, is a testament to their democratic vocation and an important message to victims of the dictatorships in Venezuela, Cuba, and Nicaragua. Relatedly, the United States hopes that these presidents, with their progressive credentials, will be able to develop persuasive arguments with the leaders of those nations to move toward greater democracy.

—Kevin Whitaker

A renewed US emphasis on democracy promotion worldwide is an opportunity for countries to showcase and deepen their democratic credentials at home. Petro came to office promising to address the needs of long-neglected Afro-Colombian and indigenous communities in areas of the country that the US Agency for International Development has worked for decades. This work is ripe for expansion given the priorities of the new Colombian government.

—Geoff Ramsey

Colombia is one of the United States’ most important regional allies and an historically reliable global partner as well. Just last year, Colombia was designated as a major non-NATO ally, becoming the third country in Latin America with that privileged status and among fewer than twenty such countries globally. That distinction was a long time coming and reflects the traditionally deep cooperation of the United States and Colombia on a broader set of issues that go beyond the bilateral relationship. Petro has an opportunity to show that the political ideology of a country’s can change, but the institutions of democracy remain strong.

—Jason Marczak

5. Do we see any hints of a policy shift from the US with regard to counternarcotics strategy in Colombia?

The United States seems to have embraced the Colombian idea of a “holistic” approach, whatever that turns out to mean, and does not appear publicly to be pressuring for more eradication, even though that tool has proven effective in Colombia in the past. Greater clarity from the Colombian government about the practical components of its Paz Total approach with respect to counternarcotics would be welcome. 

National Security Council Senior Director Juan Gonzalez said that the United States is considering the request to send a special envoy to the Paz Total process. That would be a daring move given that the process is only just getting started, and given that this is an internal Colombian matter.

—Kevin Whitaker

The post Can Colombia and the United States get on the same page? appeared first on Atlantic Council.

As the first country to pass a law codifying women’s vital roles in building peace and security worldwide, the United States has the potential to become a leader in advancing the gender-equality fight. However, it has yet to tap into the power of its cities and states—even though mayors and governors are key to implementing the country’s foreign policy goals through partnerships with other local leaders across the Americas. The United States must deepen its commitment to women’s peace and security by taking these principles beyond the national level.

Six years ago, the Women, Peace and Security (WPS) Act created a government-wide WPS strategy. Since then, US agencies have identified four lines of effort to achieve its objectives.

Federal agencies such as the departments of State, Defense, and Homeland Security, and the US Agency for International Development (USAID) have developed implementation plans, outlining their WPS objectives, actions, and goals. But for all lines of effort, cities and states can play a pivotal role that is not sufficiently reflected in US policy.

As the fourth line of effort explains, partnerships are a crucial part of the United States’ WPS strategy. In the realm of city- and state-level diplomacy, mayors and governors are already forming important partnerships with their counterparts across the Americas, which could prove useful in achieving all WPS goals. Those relationships are key because the Western Hemisphere includes the ten most violent cities in the world, and women and girls are disproportionately impacted by such violence. Women and girls across the hemisphere are vulnerable to gang violence, femicide, and sexual harassment in public spaces. A 2022 survey found that 89 percent of women interviewees in Buenos Aires had experienced sexual harassment on public transportation. In Lima, Peru, nine of ten women between the ages of nineteen and twenty-nine have been victims of street harassment. The Mexican municipality of Juárez, Nuevo León registered over twenty femicides and 158 disappeared women and girls in 2022. According to a survey by Stop Street Harassment, 66 percent of women reported experiencing sexual harassment in public spaces across the United States.

The United States has recently made great strides in incorporating local leaders into a whole-of-country foreign-policy strategy, but it has yet to do that with its WPS strategy. The United States already has the structure for doing so; last year, the US State Department launched a new Unit for Subnational Diplomacy led by Special Representative for City and State Diplomacy Nina Hachigian, who was formerly deputy mayor of international affairs for Los Angeles. In her first “dipnote,” she wrote about her office’s aim to create channels for greater connectivity and collaboration between local leaders. That connectivity could provide a channel for achieving the United States’ WPS goals.

Hachigian will be in attendance at the first-ever Cities Summit of the Americas in Denver later this month, which will provide local leaders with an opportunity to share knowledge about the strategies they deploy at home to advance WPS principles. At the convening, the State Department must ensure that conversations about building safer, resilient, and more accessible and sustainable cities include gender-sensitive perspectives that shed light on the experiences of marginalized groups. It should do more than just avoid “manels” to promote gender equity and women’s peace and security: Organizers must also dedicate time to discussing, with all participating mayors, the impacts of migration, climate, and housing specifically on women.

In the near term, the State Department should prioritize gender equality in the new “Cities Forward” initiative, which was announced last year to help cities in the Americas share knowledge about solving various urban issues and will be formally launched this spring. Since this program will direct US government funds to support urban development, it is crucial that the city-level action plans demonstrate a disaggregated impact on women and girls.

In the long term, the United States should embed WPS into its city- and state-level work by ensuring that women meaningfully participate in subnational diplomacy, that women are protected and have freedom in cities, and that cities and states create deep partnerships focused on gender equality:

• Ensuring women’s meaningful participation: The United States should ensure that its city and state diplomacy strategy supports current women leaders and helps them learn from each other’s experiences. Despite the growing numbers of local female elected officials in the Western Hemisphere—including Santiago Mayor Irací Hassler, Bogotá Mayor Claudia López, Los Angeles Mayor Karen Bass, and Intendant of Montevideo Caroline Cosse—the glass ceiling persists. Within the last year, only 11 percent of Latin American large cities and 26 percent of large cities in the United States have had women mayors. On the sidelines of major urban conferences such as the Cities Summit, the C40 World Mayors Summit, and Urban20, the United States could host off-the-record convenings with women mayors to strengthen international partnership opportunities and identify obstacles to reaching political parity.
  
  The United States should also, through its cities and states, engage civil-society groups that are advocating for women’s rights in cities and thus fostering an environment conducive to female political leadership. Women represent roughly 52 percent of the public-sector workforce in Latin America and the Caribbean and play a crucial role in supporting local governments. Civil-society networks such as La Red Mujer y Hábitat are working to advance women’s rights in urban areas. The Subnational Unit should encourage US mayors to work with these civil-society groups and public-sector leaders when forging partnerships with Latin American and Caribbean cities, particularly those led by male mayors, to ensure that discussions include a gender perspective and create space for women’s participation.

• Strengthening women’s protection and freedom in cities: The United States should collaborate with local governments and bolster the capacities of municipal justice systems and security sectors, adopting a gender-sensitive approach, to effectively prevent and respond to gender-based violence. By recognizing the ways in which violence affects female populations, in all their diversity, cities can develop more targeted and effective responses. The United States can learn from other cities’ approaches: Kelowna, Canada, introduced programming between community groups and local police to rebuild trust and accountability after multiple indigenous women were murdered or disappeared. Durango, Mexico, uses real-time data to identify and classify high-risk zones for women, making it possible to deploy awareness and security campaigns tailored to the distinct needs of various populations. The Unit of Subnational Diplomacy should collaborate with the Secretary’s Office of Global Women’s Issues at the US Department of State and the Office of Women, Peace, and Security at the US Department of Defense to analyze these varied city-level approaches and develop blueprints for city-level WPS plans in the United States.

• Deepening partnerships to support gender equality: The United States should scale up and coordinate existing efforts that are already supporting women’s equity in cities. The City Hub and Network for Gender Equity (CHANGE)—formed by leaders in Los Angeles, Buenos Aires, Mexico City, and four other major global cities—aims to tackle gender disparities in access to government services. The State Department’s subnational unit should assist in an expansion of the CHANGE network and other city-led initiatives to reach a more diverse body of cities across the Americas.
  
  The United States should also amplify and collaborate with existing local grassroots networks—such as the Association of Women Council Members and Mayors of Bolivia or the Network of Women Vice Governors of Peru – to foster regional connections between women leaders and support existing initiatives from the bottom up.
  
  Additionally, the recently announced USAID Network for Gender Inclusive Democracy could offer a platform to support women’s political and civic participation and leadership in cities. The new network aims to promote coordination, knowledge-sharing, and policy advocacy to advance gender equality. The special representative for subnational diplomacy should advocate for the participation of state and city leaders in this new program. Including local leaders in this network can help the Subnational Unit enhance its efforts in championing gender-sensitive strategies, while simultaneously providing a local perspective to national-level discussions on gender and democracy.

The United States’ approach to city and state diplomacy is still in development. The Unit for Subnational Diplomacy is barely six months old, and Hachigian’s team has the opportunity to champion a gender-sensitive security strategy across the hemisphere. By 2050, nine in ten people in the United States as well as Latin America and the Caribbean are expected to live in urban areas. The leaders who run these areas must be empowered to make them safer and more equitable environments for all.

Willow Fortunoff is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

Diana Paz García is a conflict resolution graduate from Georgetown University specializing in gender-based violence and nontraditional security threats.

The post How states and cities can lead the US fight for a gender-sensitive security strategy appeared first on Atlantic Council.

1. What does Lula come away with from Beijing?

In addition to the fifteen agreements signed between Brazil and China, Lula also leaves Beijing with a path toward greater cooperation even beyond trade. Given that China is Brazil’s number one trading partner, this visit was an important seal for Lula, wrapping up his first hundred days in office having visited Brazil’s top three economic partners: Argentina, the United States, and now China.

Recent comments by Brazilian Finance Minister Fernando Haddad reflect Brazil’s intent to deepen economic relations with both China and the United States. “Brazil has the size to make bilateral agreements,” Haddad told journalists during the China trip.

—Valentina Sader is an associate director and Brazil lead at the Atlantic Council’s Adrienne Arsht Latin America Center.

2. During the trip, Lula called for BRICS countries to trade in their own currencies and end the dollar’s trade dominance. How real is this threat?

In calling for an end to the dollar’s dominance in world trade during his China visit, Lula was singing to a choir whose theme song is renminbi (RMB) internationalization. His advocacy of a “BRICS currency” to replace the dollar in settling trade transactions among leading emerging-market countries (Brazil, Russia, India, China, and South Africa make up the informal BRICS group) likely won’t come to much—at least in the foreseeable future. Nonetheless, it does underline the opportunities for Beijing to increase the international use of the Chinese currency. As Brazil’s trade with China hit a record $150 billion last year, the RMB emerged as the country’s second-largest reserve currency (representing 5.37 percent of foreign-exchange holdings). That’s an indication of a trend of increasing RMB-real transactions, which likely will continue in the future as the two countries have signed several agreements aimed at expanding trade. However, Brazilian imports and exports continue to be settled overwhelmingly in dollars, and the US currency still occupies over three-quarters of Brazilian reserves.

At the end of March, a Brazilian bank (controlled by a Chinese parent) became the first financial institution in Latin America to join China’s Cross-Border Interbank Payment System, which settles trade deals in the Chinese currency. But most Brazilian companies continue to use the dollar-based SWIFT messaging system. Even as the RMB’s global share of trade transactions doubled to 4.5 percent in 2022, the dollar remained the currency of choice in 84 percent of all trade deals worldwide.

—Jeremy Mark is a nonresident senior fellow with the GeoEconomics Center. He previously worked for the IMF and the Asian Wall Street Journal.

3. What did China gain from this visit?

From what we have seen thus far, Lula and Xi gained crucial “wins” from their bilateral meeting. The two signed fifteen bilateral agreements in everything from agriculture to technology, demonstrating further development of the China-Brazil comprehensive strategic partnership. Lula even visited a Huawei technology development center and received a presentation about how 5G can revolutionize telemedicine and education; this suggests Lula’s willingness to accelerate China’s 5G expansion in Brazil, despite US efforts to slow China’s 5G advance in the region due to espionage concerns.

Both leaders also successfully projected themselves as champions of the Global South, professing their desire to “balance world geopolitics,” advocating for their countries as mediators in Ukraine, and upholding the BRICS mechanism as a counterweight to the US-dominated international system. However, Lula’s most inflammatory statement that BRICS countries ditch the US dollar and trade in their own currencies was likely bluster, especially given the fact that the US dollar still accounts for 60 percent of global central bank reserves.

—Leland Lazarus is a nonresident fellow at the Global China Hub and associate director for national security at Florida International University’s Jack Gordon Institute of Public Policy. He formerly served as special assistant and speechwriter to the commander of US Southern Command and as a US State Department foreign service officer in China and the Caribbean.

4. What do Lula’s visits to both Washington and Beijing reveal about his foreign policy approach?

Differently from the trip to Washington in February, Lula’s visit to Beijing had a more clear and concrete purpose. The trip to Washington was aimed at reestablishing relations and discussing cooperation on common challenges, such as democracy and climate. The visit to Beijing had an important business component. Both were significant in consolidating Lula’s foreign-policy goals.

Brazil will continue its traditional non-alignment, non-interventionist approach to foreign policy, seeking to maintain close diplomatic relations with strategic partners, which include both the United States and China. At the same time, Lula will continue to push for the rethinking of the global order to reflect current times, carving out that relevance for Brazil. A few examples include Lula’s interest in leading peace conversations between Russia and Ukraine, hosting the Group of Twenty (G20) summit in 2024, questioning the reliance on the dollar, proposing changes to the United Nations Security Council, and sending a special foreign policy advisor to Venezuela for meetings with the Maduro regime and its opposition. The question that remains is whether or not Lula is picking the right battles—and if he will have the support, domestically and internationally, to be successful.

—Valentina Sader

5. How can the Lula visit be seen within the context of Xi’s renewed outreach to the Global South?

Lula’s visit to China and meeting with Xi reflects Lula’s desire to again—as in his previous times in office—be at the center of the global stage. And it is a visit that is squarely within China’s priorities to deepen ties with Brazil as part of its quest for greater leadership in the Global South. China is Brazil’s number one trade partner. And this visit is a clear signal that those economic ties will only deepen in the years to come.

What cannot be missed is the difference in pomp and delegation size between the China visit and Lula’s trip to Washington two months earlier. Whereas the US visit was a short, two-day stop without a business contingent, the China trip is twice as long with a large delegation of businesspeople looking for new commercial opportunities now that China has reopened after its COVID-19 lockdowns. It’s also reflective of Lula’s inauguration: China sent then Vice President Wang Qishan—a close ally of Xi—to lead its delegation, while the US delegation was led by Interior Secretary Deb Haaland.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

The post What the Lula-Xi partnership means for the world appeared first on Atlantic Council.

On April 11, Scowcroft Strategy Initiative Assistant Director Imran Bayoumi authored an article for Foreign Policy commenting on the ongoing state of unrest and turmoil in Haiti. Bayoumi posits that achieving sustainable peace in the country necessitates a US strategy that prioritizes the promotion and cultivation of democracy over militarized interventions. To underscore his argument, Bayoumi references significant legislative measures such as the 2019 Global Fragility Act (GFA) and 2021 Montana Accord, which highlight the urgent requirement for a democracy-centered approach not only to Haiti but also to other fragile and volatile states worldwide.

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The US-Argentina relationship is increasingly characterized by mutual interest in developing lithium deposits and in defining China’s role in Argentina, in the latter case both in the area of China’s growing lithium investments and in other areas. Wednesday’s meeting coincided with the two hundredth anniversary of bilateral ties, but for this long-standing partnership to continue to grow, each side will have to clearly articulate its national interests and find consensus on those important topics.

Argentina, with one of the world’s largest lithium reserves, has received renewed attention considering lithium’s importance in electric vehicle and grid storage batteries, essential technologies that will be needed at large scale for an energy transition. The country has over twenty-eight lithium projects under exploration, including thirteen ongoing or announced projects with Chinese investment since 2018. Two of the thirteen Chinese projects are valued at or above one billion dollars, a significant promise of funds at a time when Argentina’s economy is contracting.

The Biden administration has also set its sights on lithium acquisition, naming the mineral as a strategic component of its proposed “Made in America” supply chain. Because of this domestic focus and particularly constraints in the 2022 Inflation Reduction Act, the United States has thus far been unable to accommodate Argentina’s efforts at greater bilateral lithium collaboration. If current trends continue, Argentine lithium could be largely channeled either toward Argentine national development or Chinese economic and energy growth, leaving the United States out of this critical mineral market. The Biden-Fernández conversation was a missed opportunity to demonstrate greater US flexibility on lithium sourcing and underscore how US and Argentine interests align on this theme.

Beyond lithium investments, the interest the United States and Argentina share in defining China’s role in Argentina was another key topic left publicly unsaid, even if the ideal scope of Chinese engagement differs for each country. For the United States, in an age of geopolitical competition, any US ally’s engagement with China draws increased scrutiny. Over the past year, attention has turned to Argentina’s agreement with China to build a nuclear power plant and its participation in Beijing’s Belt and Road Initiative.

For Argentina, China remains a strong trade and investment partner, and the country’s public and private sectors are strongly focused on deepening opportunities for exports. In future encounters, Biden and Fernández—or other top officials from the respective countries—should dedicate part of their discussions to further parsing the other’s posture on Chinese engagement. Hearing Argentina’s rationales for engaging with China first-hand would greatly help the United States craft competitive alternatives that fulfill US and Argentine interests.

Fernández may be seeking a second four-year term in October. In an election year, voters are looking for tangible deliverables, which he will not receive from this week’s Biden meeting alone. Without substantive bilateral engagement on two crucial long-term topics, Fernández will return to Argentina with limited guarantees for the future, independent of how discussions develop around restructuring the country’s International Monetary Fund loan. Ultimately, managing Argentina’s critical mineral resources and triangulating between Beijing and Washington will be a long-term challenge for whoever the country’s next president may be.

Isabel Bernhard is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

The post The US and Argentine presidents left the most important words unsaid appeared first on Atlantic Council.

It’s high-wire diplomacy. Taiwanese President Tsai Ing-wen traveled to New York, then to Guatemala and Belize before a final stop in Los Angeles last week for a highly anticipated meeting with US House Speaker Kevin McCarthy. The visit comes as tensions between the United States and China are nearing a boiling point, and as Taiwan is hustling to hang on to its allies in Latin America after Honduras recently switched to recognizing Beijing. Meanwhile, former Taiwanese President Ma Ying-jeou visited China—an exceedingly rare instance of high-level cross-strait diplomacy. China responded with military exercises near Taiwan. Below, our experts explore what’s next.

Monday, April 10

Matt Geraci: The reaction to Tsai’s congressional meetings suggests that Beijing does not want to escalate

Friday, April 7

Kitsch Liao: Assertive moves from Congress give a glimpse of China’s escalatory ladder

Monday, April 3

Isabel Bernhard: Tsai’s visit to Central America glosses over a powerful pillar of Taiwanese diplomacy: free trade

Markus Garlauskas: Don’t let Beijing define the narrative of Taiwan’s relations with the world

Friday, March 31

Leland Lazarus: Tsai will play up concrete reasons for Guatemala and Belize to remain allies

Thursday, March 30

Wen-Ti Sung: Military escalation would not redound to Beijing’s benefit

Lev Nachman: Even though Tsai’s US trip is typical, expect an exaggerated response from China

The reaction to Tsai’s congressional meetings suggests that Beijing does not want to escalate

An all-too common pattern of events unfolded following Tsai’s meeting with McCarthy and his supporting congressional delegation in California. Tsai’s transits through the United States as president of Taiwan, of which this is her seventh such visit, historically have drawn the ire of Beijing and often result in a mixture of diplomatic sanctions and military exercises. This past weekend was no exception. Following sanctions on the Hudson Institute and Ronald Reagan Presidential Library, China announced a three-day long Joint Sword exercise beginning on April 8, which simulated an air and sea blockade of Taiwan, as a “stern warning” to the Taiwanese and US governments. China sent more than seventy aircraft sorties near Taiwan on all three days of the drills, approaching past record single-day tallies for such flights since Taipei began releasing data on the flights in 2020.

The frequency of US congressional delegation visits and Tsai’s transits through the United States has steadily increased. But despite the narrative pushed by Beijing, there is nothing within the One China Policy (which is guided by the Taiwan Relations Act), the three US-China Joint Communiques, and the Six Assurances that forbids sitting members of Congress from engaging with members of the Taiwanese government, including its president. Rhetoric is not policy—the US approach to Taiwan has remained consistent no matter the rhetorical support provided by sitting members of Congress responding to threats made by Beijing to cease interactions with Taiwan’s government.

As a quick review, Beijing’s diplomatic and/or military responses to Tsai’s transits through the US have steadily ramped up in intensity over the years:

• Tsai’s first transit through the United States as Taiwan’s president in June and July 2016 led to a diplomatic response, in which China suspended diplomatic contact with Taiwan.
• Beijing reacted to her second transit through the United States in January 2017 by sailing its first aircraft carrier, the Liaoning, through the Taiwan Strait in the weeks prior to the visit.
• During her third transit through the United States in October and November 2017, Chinese bombers reportedly “test[ed] U.S. defense zones around Guam.” around this period.
• In the days leading up to her fourth transit through the US in August 2018, Chinese Foreign Ministry spokesman Geng Shuang urged the United States “not to allow the transit of the leader of the Taiwan region, and not send any wrong signals to Taiwan independence forces.”
• Following her fifth transit through the United States in March 2019, two PLA J-11 fighter jets crossed the median line for the first time since 1999, though this could have also been attributed to two US vessels, the USS Curtis Wilbur destroyer and Coast Guard cutter USCGC Bertholf, sailing through the Taiwan Strait around the same time.
• After her sixth transit through the United States in July 2019, the Cross-Strait Tourism Exchange Association announced the suspension of a pilot program that allowed Chinese citizens to visit Taiwan for leisure, and shortly after Tsai’s return, China held military exercises on both ends of the Taiwan Strait from July 28 to August 2. This was the first occurrence of simultaneous exercises since the Third Taiwan Strait Crisis of 1995–1996.

In comparison with reactions to her past transits, this appears to be a significant ramping up of Chinese actions. Yet, how Beijing chose not to respond was just as notable as how it did. In a surprise epilogue to the McCarthy-Tsai meeting in California, a delegation led by House Foreign Affairs Committee Chairman Michael McCaul arrived in Taiwan on April 6 before she had even returned from her US transit. During a luncheon with Tsai on April 8, McCaul pledged to “speed up” weapons sales to Taiwan.

The timing of McCaul’s delegation visit was likely aimed in part to occur after Beijing had already initiated a response to the McCarthy-Tsai meeting in California, catching China on the backfoot and testing the limits of how much further a subsequent reaction might go. As noted by Wall Street Journal China Bureau Chief Jonathan Cheng, McCaul’s visit with seven other lawmakers, which normally would have received strong backlash from Beijing, has largely been ignored by Chinese state media. Markus Garlauskas, director of the Atlantic Council’s Indo-Pacific Security Initiative, suggested on Twitter that the relative size of the exercise was notably contained compared to how large it could have been.

One might have expected the combination of Tsai’s meeting with McCarthy and the surprise delegation visit by McCaul in Taipei could have led to Beijing responding even more aggressively than it had in response to then House Speaker Nancy Pelosi’s historic visit to Taipei in August 2022, in which five days of People’s Liberation Army navy and air force exercises were initiated and test missile launches struck the waters east, northeast, and southeast of Taiwan. The fact that, as of this writing, no additional measures have been taken by Beijing indicates that there may be some desire not to escalate things further.

—Matt Geraci is an assistant director at the Atlantic Council’s Global China Hub.

Assertive moves from Congress give a glimpse of China’s escalatory ladder

Tsai’s meeting with McCarthy did not break new ground, as this would be the third time a Taiwanese president has met a US House speaker. But it holds greater significance when considered along with frequent US delegation visits to Taiwan and increasingly frequent administration and track-two conversations between the two governments on arms delivery, countering disinformation, and economic cooperation. The low-profile but more frequent interaction between the Biden administration and Taiwan is a smart move, especially before adequate guardrails and lines of communication can be established between the United States and China to prevent any inadvertent escalation.

One notable outcome of the discussion was McCarthy’s call for the United States to expedite delivery of arms to Taiwan to shore up its ability to defend itself. Over the past year, despite the urgent need for asymmetric and survivable weapon systems in line with Taiwan’s overall defense concept, about half of US arms sales to Taiwan (its only foreign source of arms) was made up of spare parts, munitions, and support on weapon systems already approved from previous sales, while the rest consists of legacy acquisitions. That’s because under foreign military sales programs, it takes years of lead time to clear bureaucratic processes. But this may be starting to change, as Defense Secretary Lloyd Austin recently stated that for Taiwan the Pentagon intends to use presidential drawdown authority, which allows the president to bypass normal procedural requirements and draw from existing US stocks immediately to reinforce Taiwan’s needs.

The strong show of support for Taiwan from both McCarthy and House Foreign Affairs Committee Chairman Michael McCaul—who made a surprise visit to Taiwan on Thursday—sends a message to China on Congress’ willingness to represent the United States in a more assertive manner and compel China to demonstrate its own red lines and guardrails. China has traditionally kept vague its own red lines and eschewed any direct line of communication in crisis situations. That is designed for a relatively risk-averse opponent to back down.

Both leaders, however, also reiterated strong support for the US-Taiwan and US-China policies of Three Communiques, Six Assurances, and Strategic Ambiguity (Dual Deterrence), which together have been in place since the 1970s. This is a deliberate move to assure China that there has been no policy change toward Taiwan and offer China an off-ramp in an escalatory situation. The delicate balance between providing sufficient military deterrence to make a Chinese invasion difficult, while also providing sufficient political assurances so that the Chinese Communist Party government can credibly assuage its internal political rivals that the possibility of an eventual unification is not entirely lost, is one that is well understood by both the US and Taiwan governments.

Now the United States should closely observe China’s rhetorical, kinetic, and domestic censorship responses to discern a coherent picture of China’s escalatory ladder. Such a determination is crucial to formulating a more precise and hopefully peaceful solution to a seven-decade-old dilemma.

One initial and perhaps alarming example of Chinese kinetic response took place shortly before Tsai-McCarthy meeting. The Chinese Coast Guard announced an inspection exercise for all civilian traffic in the “three small links (小三通)” routes between China and Taiwan, a move that evokes a potential quarantine or blockade. In 2019 the coast guard was moved under the People’s Armed Police, a paramilitary force that is neither part of the People’s Liberation Army nor entirely a law enforcement organization, but is one with a heavy emphasis on domestic stability. Its role offers a hint of how China might choke off the Taiwan Strait.

—Kitsch Liao is an assistant director at the Atlantic Council’s Global China Hub.

Tsai’s visit to Central America glosses over a powerful pillar of Taiwanese diplomacy: free trade

Over the weekend, Tsai concluded a three-day trip to Guatemala and began her tour of Belize. As two of Taiwan’s thirteen remaining allies following Honduras’ switch to Beijing on March 25, both countries have taken on even greater visibility and strategic importance. Tsai’s itinerary highlights the results of Taiwanese infrastructure and capacity-building investments, while underscoring the promise of multilateral collaboration that often accompanies Taiwanese projects.

But surprisingly, Tsai’s diplomatic tour has left a key strength of Taiwanese diplomacy in Central America largely unsaid: Taiwan’s commitment to free trade with its allies. Since 2006, Guatemala has maintained a free trade agreement (FTA) with Taiwan, while Belize and Taiwan’s economic cooperation agreement came into force in 2022. When Panama, Nicaragua, and Honduras were Taiwanese allies, Taiwan similarly signed FTAs with all. The Panama-Taiwan FTA was withdrawn in 2017, while the Nicaragua-Taiwan FTA was reversed in 2021 after those countries severed relations. Yet even after Honduras’ switch last month, Taiwanese authorities have recently claimed that the Honduras-Taiwan FTA remains in effect. Meanwhile, of all the former Taiwanese allies that China has built diplomatic ties with since the early 2000s, the only country China has signed an FTA with is Costa Rica.

Taiwan’s commitment to free trade is a unique and underplayed asset in its foreign policy arsenal that, if leveraged strategically, could further highlight the democratic island’s global profile. As recent events illustrate, free trade with Taiwan did not prevent Honduras from accumulating $600 million in debt to Taiwan, nor is free trade a universal salve to the challenges that Taiwan’s allies face. Yet in a Latin American macroeconomic environment concerned with growing trade deficits or the potential for Chinese “debt trap diplomacy,” Taiwan and its remaining partners could offer an alternative vision for economic cooperation. Tsai would be well-suited in trips like these to make the case for free trade.

—Isabel Bernhard is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

Don’t let Beijing define the narrative of Taiwan’s relations with the world

China is yet again ramping up its saber-rattling over the travels of Taiwanese President Tsai Ing-wen, who is sandwiching stops in New York and Los Angeles around her ongoing trip to Central America. But that should not deter US leaders—including Speaker of the House Kevin McCarthy, who plans to meet with Tsai this week in Los Angeles—from staying the course and engaging with Taiwanese officials.

Unfortunately, the media coverage of her US stopovers is not helping, as it has been dominated by the rhetoric and dire threats emanating from Beijing. Just a quick sampling of top headlines about Tsai’s travels shows how prominent this theme has been in the Western media:

• Beijing warns of ‘severe impact’ on US-China relations as Taiwan’s leader lands in New York
• China threatens retaliation if Kevin McCarthy meets with Taiwan’s president
• Taiwan’s President Lands in the U.S. Amid Threats From China

At first glance, with this sort of framing, it is easy to see how this situation could be misinterpreted. To those who do not track US-Taiwan relations closely, Tsai’s transit of the United States may seem to be a rare activity, a high-stakes display of diplomatic brinksmanship amid heightened tensions, or even an intentional poke in the eye to Chinese Communist Party leader Xi Jinping.

This framing serves Beijing’s interest in seeking to isolate Taiwan and portray both Taipei and Washington as provocateurs. The truth is, as US State Department officials have repeatedly stated, such transits are not unusual. This is the seventh time for Tsai herself.

To be clear, the United States and its friends around the world should not ignore threats from Beijing, implicit or explicit. Responsible leaders should not be complacent about the threat that the People’s Republic of China (PRC) poses to the international order as a strategic competitor and as a potential military aggressor. They should have no illusions about Xi’s willingness to use coercion and force to achieve his goals and to change the status quo. Listening, watching, and carefully assessing Xi’s “red lines” is also an important endeavor that may help to prevent a miscalculation that could lead to the most devastating war in human history. However, no country in the world should allow the near-constant stream of threats and warnings emitting from Beijing to lead it to believe that actions that are reasonable, routine, and restrained are instead risky, worrisome, and escalatory.

Read more from Markus Garlauskas, the director of the Indo-Pacific Security Initiative in the Scowcroft Center for Strategy and Security and a former senior US government official:

New Atlanticist

Apr 3, 2023

Don’t let Beijing define the narrative of Taiwan’s relations with the world

By Markus Garlauskas

As Taiwan President Tsai Ing-wen stops in the United States, Beijing is trying to paint reasonable, routine, and restrained actions as risky, worrisome, and escalatory.

China East Asia

Tsai will play up concrete reasons for Guatemala and Belize to remain allies

Tsai arrives in Guatemala in the midst of a contentious presidential election season. Twenty-three candidates will vie for the presidency, and there are already concerns about ensuring a free and fair electoral process ahead of the June 25 election. Taiwan hasn’t been a topic of contention among presidential candidates, but it’s possible that some candidates may criticize Tsai for meeting with the deeply unpopular President Alejandro Giammattei, unless she also meets with opposition figures.

During her trip, Tsai will most likely visit various projects funded by Taiwan’s International Cooperation and Development Fund (ICDF), including health care personnel training programs, agribusiness technical assistance, and financial support to local entrepreneurs. Last year, Taiwan also paid for a lobbying contract to promote Guatemala with US officials, an odd example of the extent Taiwan will go to keep Guatemala as an ally. But whether this support is enough to prevent Guatemalan leaders from eventually making the same economic calculus as Honduras is yet to be seen. In December, Guatemala’s ambassador to Taiwan pledged that his country would plan a summit of “Taiwan-friendly” countries in March; as Tsai touches down in Guatemala, that pledge has yet to materialize.

In Belize, Tsai needs to demonstrate to local leaders that Taiwan continues to deliver on key local priorities, such as infrastructure, medicine and public health, and agricultural technology. In May 2022, Belize, Taiwan and the Inter-American Development Bank signed an agreement to support Belizean micro, small, and medium-sized enterprises, especially for women entrepreneurs. Taiwan’s ICDF provided five million dollars to this initiative. Tsai will likely visit local entrepreneurs who have benefited from this program. Tsai and her Belizean counterpart, Prime Minister John Briceño, might also announce new trade agreements for Taiwan to import Belizean citrus fruits, juice concentrate, and marine products such as shrimp, and for Belize to import Taiwanese electric buses to support Belize’s renewable energy goals.

—Leland Lazarus is a nonresident fellow at the Global China Hub and associate director for national security at Florida International University’s Jack Gordon Institute of Public Policy. He formerly served as special assistant and speechwriter to the commander of US Southern Command and as a US State Department foreign service officer in China and the Caribbean.

Military escalation would not redound to Beijing’s benefit

China will register its displeasure with Tsai’s US trip. Rhetorical censure, check. Targeted sanctions including blacklisting of select Taiwanese politicians and entities, possible. Some limited economic sanctions and military show of force, also in the cards.

But it would not be in Beijing’s strategic interest to use egregiously escalatory military action in retaliation, given two considerations: third-party audiences and the trip by Taiwan’s ex-President Ma to China.

First, third-party audiences such as Europe would rather not see the Taiwan Strait situation escalate, for they are already busy with Ukraine and post-COVID economic recovery. And they understand Taiwan and the United States get this and are therefore opting to hold Tsai’s meeting with McCarthy on US soil, a less politically sensitive option to Beijing than McCarthy visiting Taiwan.

In other words, Taiwan and the United States are already choosing the relatively less provocative option. If in response, Beijing still chooses to retaliate at a level matching or even exceeding what it did after then Speaker Nancy Pelosi’s Taiwan visit in August 2022, then the United States and Taiwan will cite Beijing’s reaction to seize the high ground in the eyes of other governments and paint a picture of an insatiable Beijing that no one can work with.

Second, Ma’s trip marks the first visit to China by a former or sitting Taiwanese president in more than half a century. If Beijing escalates militarily, it will waste this rare opportunity to underscore cross-strait friendship, in exchange for chipping away at the success of Tsai’s US trip ever so slightly.

So if Beijing does escalate militarily, despite all these downsides, it would either be a sign of questionable strategic thinking or misalignment among internal agencies working at cross purposes. China is not always playing three-dimensional chess.

—Wen-Ti Sung is a nonresident fellow at the Atlantic Council’s Global China Hub and a political scientist at the Australian National University’s Taiwan Studies Program.

Even though Tsai’s US trip is typical, expect an exaggerated response from China

On paper, it is totally normal and in accordance with US protocol for a Taiwanese president to stop over in the United States. Every Taiwanese president, regardless of whether they are from the Democratic Progressive Party (DPP) or the Kuomintang (KMT), has made these types of trips in the past. Even former president Ma—who is currently on his own semi-diplomatic trip to China—made no small number of visits to the United States while he was president. Tsai herself last visited in 2019 to give a speech at Columbia University, during which the People’s Republic of China’s (PRC) response was largely muted.

But an action like a Taiwanese president flying through the United States, which in the past was seen as a normal, small, and inconsequential act, is now going to be portrayed by the PRC as large, antagonistic, and escalatory. Even though Taiwanese presidential visits have been a longstanding practice, in the year 2023 when US-China-Taiwan tensions have reached an all-time high, such acts have become far more politicized, despite previous practices or intentions. 

Regardless of precedent, we should still anticipate an exaggerated response from the PRC. One silver lining, however, is that Tsai’s stopover in the United States is unlikely to result in large-scale military drills from the PRC similar to those that followed Pelosi’s visit to Taiwan in August 2022. Tsai’s move to meet McCarthy in the United States instead of having him come to Taiwan was a smart, pragmatic move by Tsai that helps ensure that we do not see a repeat of August 2022. Even though the PRC will make an unnecessarily big deal out of Tsai’s trip, from the PRC’s perspective it is far less inflammatory than McCarthy going to Taiwan. But we should still expect some kind of overstated response from China, likely in the form of fighter jets flying over the Taiwan Strait Median Line and combative rhetoric from the PRC leadership. 

—Lev Nachman is a nonresident fellow in the Atlantic Council’s Global China Hub and an assistant professor at National Chengchi University in Taipei, Taiwan.

The post Experts react: Your guide to the Taiwanese president’s trip to the US and Central America appeared first on Atlantic Council.

Strengthening democratic institutions is critical to reversing the trend of democratic decline across the region. While these democracies struggle, international partners can help. That’s because the assistance these partners are already sending has an impact on each country’s democratic health. All aid either hinders or helps democratic development, and donors should be intentional about aligning all forms of assistance to make sure that the assistance supports countries’ democratic development. Thus, the United States and other democracies that send aid to Latin America and the Caribbean have a vital role to play in the region’s future. They must make a renewed push for assistance to the region.

Recently updated indexes and projects that summarize countless social, institutional, and political metrics across countries—including the World Justice Project’s Rule of Law Index, the Human Rights Watch’s World Report 2023, and the Economist Intelligence Unit’s Democracy Index 2022—convey a clear message. The International Institute for Democracy and Electoral Assistance’s Kevin Casas-Zamora sums it up best in the organization’s 2022 Global State of Democracy Report: “Democracy is under both literal and figurative assault around the world.”

As this week’s Summit for Democracy—which the United States is co-hosting with Costa Rica, the Netherlands, South Korea, and Zambia— gets underway, these reports highlight in increasingly urgent terms the regression of democratic governance around the world, including in most of Latin America.

For example, Colombia held three broadly free and fair electoral processes last year, and the rule of law is relatively strong. Many in Bogotá and other big cities have access to judicial, health, law-enforcement, and other state institutions. However, elsewhere in the country, the situation is different: Rural municipalities do not have the resources to provide the same level of education or health care as capital cities, and basic infrastructure is lacking. Public safety is even weaker. With its unequal application of democratic norms and protections, Colombia has been labeled a “flawed democracy” by the Economist Intelligence Unit. It’s not alone: Two-thirds of countries in the region (including Brazil and Mexico) qualify as flawed democracies or “hybrid regimes.” Only three are full democracies and the remaining four of the countries scored are fully authoritarian.

Across Latin America, weak institutions perpetuate corruption, inequality, poverty, and insecurity, and they standardize illicit economies. This provides a breeding ground for populist leaders on both the left and right to turn the situation to their advantage by exacerbating political polarization and popular distrust of the government. Weak rule of law is a constant trait of fragile democracies or hybrid regimes. Populist El Salvadoran President Nayib Bukele, for example, suspended civil liberties and arrested thousands of suspected gangsters with no due process. In the presence of weak institutions, criminals and corrupt officials can buy their way out of accountability. Gangs can shake down business owners with impunity. A lack of leadership and inclusion, including political parties’ own undemocratic behavior, is also a constant regionwide.

The factors contributing to the region’s democratic decline are well-known. What is less acknowledged is how these democratic deficits undermine the quality of life for millions of citizens and how they hinder government responses to new challenges and crises. From COVID-19 to Russia’s full-scale invasion of Ukraine, shocks have already tested the region’s governments, and they were found wanting. Three threats in particular have the potential to further destabilize Latin America’s democratic progress:

• Climate change and natural disasters have already started to upend economic and social conditions. Much of southern South America has suffered from record heat waves this year, fueling record forest fires in parts of Chile. A heavy rainy season has exacerbated a major Dengue fever outbreak in eastern Bolivia and caused devastating floods in Brazil. Meanwhile, the Paraná River—a major transportation artery and irrigation source—has fallen to such a low level that shipping has struggled; and Uruguay declared a national emergency in October last year due to crop failures caused by drought. Poor environmental governance both contributes to these phenomena and hinders mitigation and adaptation efforts. Governments’ inabilities to respond effectively contribute to poverty, dislocation, and migration across the region. To strengthen their democracies, governments must be able to channel citizen demands more nimbly and mobilize resources to mitigate these environmental or climate shocks .
• Latin America and the Caribbean struggle with food insecurity and price shocks. Energy prices and inflation add to severe cost-of-living pressures for many across the region. A new report from the Pan American Health Organization shows that over 22 percent of the Latin American and Caribbean population cannot afford a healthy diet, with rates reaching over 50 percent in the Caribbean. Many governments provide subsidies for certain foodstuffs, fuel, and other critical imports, but high inflation and soaring debt payments will challenge governments’ abilities to keep this up. This can rapidly lead to popular unrest: For example, in 2019, a simple public transportation fare hike triggered massive protests in Chile. A similar increase in gas prices in Panama resulted in over a week of protests over fuel, food, and medicine, and Suriname saw protests this month after the government announced it would cut electricity and fuel subsidies.
• Most regional governments throughout Latin America and the Caribbean are also under extreme financial stress, which limits their abilities to respond to new crises. The resource boom—fueled by Chinese growth and consumption—that propelled massive social spending and slashed poverty around the region ended years ago. As budgets were tightening, COVID-19 struck the region harder than most others and forced governments to expand deficit spending as economies closed for months at a time. Several states ended the pandemic with bulging debts and lower credit ratings, meaning that they now have less flexibility when it comes to confronting the next shock. And while Latin America’s economy grew nearly 4 percent in 2022, that growth is projected to slow in 2023 as the US Federal Reserve continues to hike interest rates and the value of the dollar continues to rise, with damaging spillover effects for regional economies.

The most effective way to prepare for and mitigate against these external shocks is by strengthening democratic institutions—ensuring greater transparency, democratic participation, and government responsiveness. The United States and other democracies that help the region in dealing with these external shocks have a vital role to play in helping Latin America reverse the trend of democratic decline and prepare for coming challenges that could exacerbate democratic decay. This role extends to the diplomatic, development, and private sectors, which should support partners with best practices and resources that incentivize transparency, civic participation, free trade, and countering the influence of malign foreign actors such as China, Iran, and Russia. As US Agency for International Development Administrator Samantha Power recently wrote, “everywhere they provide assistance, democratic countries must be guided by and seek to promote democratic principles—including human rights, norms that counter corruption, and environmental and social safeguards.”

Voters have delivered major course corrections in Brazil, Colombia, and elsewhere in the past year, with newly installed leaders vowing to tackle inequality. But beyond these democratic processes, there’s more that governments will need to do to fully shore up vulnerable institutions. Investing in initiatives that strengthen civil society, political party systems, and open government will help give citizens a stake in the system, improve the function of institutions, and reduce the space for incursion by would-be autocrats.

Power has rightly called for a development strategy that “addresses the economic grievances that populists have so effectively exploited, that defangs so-called digital authoritarianism, and that reorients traditional democracy assistance to grapple with modern challenges.” As the United States and its partners convene for the Summit for Democracy, creating a vision for strengthening democracy in all US assistance to Latin America should figure among the Biden administration’s highest priorities.  

Antonio Garrastazu is the senior director for Latin America and the Caribbean at the International Republican Institute.

Casey Cagley is a resident program director at the International Republican Institute.

The post How can Latin America halt its democratic backsliding? And how can the US help? appeared first on Atlantic Council.

Online Event Mon, March 27, 2023 • 1:30 pm ET

Live from the Freedom Online Coalition: How the FOC works for people around the world

The DFRLab hosts the US Deputy Secretary of State Wendy Sherman along with civil society and industry experts for a discussion on the Freedom Online Coalition and how the world’s democratic tech alliance advances human rights online.

Africa East Asia Europe & Eurasia Indo-Pacific

Ahead of the Biden administration’s second Summit for Democracy, US Deputy Secretary of State Wendy Sherman gave a sneak peek at what to expect from the US government on its commitments to protecting online rights and freedoms.

The event, hosted by the Atlantic Council’s Digital Forensic Research Lab on Monday, came on the same day that US President Joe Biden signed an executive order restricting the US government’s use of commercial spyware that may be abused by foreign governments or enable human-rights abuses overseas.

But there’s more in store for this week, Sherman said, as the United States settles into its role as chair of the Freedom Online Coalition (FOC)—a democratic tech alliance of thirty-six countries working together to support human rights online. As chair, the United States needs “to reinforce rules of the road for cyberspace that mirror and match the ideals of the rules-based international order,” said Sherman. She broke that down into four top priorities for the FOC:

1. Protecting fundamental freedoms online, especially for often-targeted human-rights defenders
2. Building resilience against digital authoritarians who use technology to achieve their aims
3. Building a consensus on policies designed to limit abuses of emerging technologies such as artificial intelligence (AI)
4. Expanding digital inclusion  

“The FOC’s absolutely vital work can feel like a continuous game of catch-up,” said Sherman. But, she added, “we have to set standards that meet this moment… we have to address what we see in front of us and equip ourselves with the building blocks to tackle what we cannot predict.”

Below are more highlights from the event, during which a panel of stakeholders also outlined the FOC’s role in ensuring that the internet and emerging technologies—including AI—adhere to democratic principles.

Deepening fundamental freedoms

• Sherman explained that the FOC will aim to combat government-initiated internet shutdowns and ensure that people can “keep using technology to advance the reach of freedom.”
• Boye Adegoke, senior manager of grants and program strategy at the Paradigm Initiative, recounted how technology was supposed to help improve transparency in Nigeria’s recent elections. But instead, the election results came in inconsistently and after long periods of time. Meanwhile, the government triggered internet shutdowns around the election period. “Bad actors… manipulate technology to make sure that the opinions and the wishes of the people do not matter at the end of the day,” he said.
• “It’s very important to continue to communicate the work that the FOC is doing… so that more and more people become aware” of internet shutdowns and can therefore prepare for the lapses in internet service and in freely flowing, accurate information, Adegoke said.
• On a practical level, once industry partners expose where disruptions are taking place, the FOC offers a mechanism by which democratic “governments can work together to sort of pressure other governments to say these [actions] aren’t acceptable,” Starzak argued.
• The FOC also provides a place for dialogue on human rights in the online space, said Alissa Starzak, vice president and global head of public policy at Cloudfare. Adegoke, who also serves in the FOC advisory network, stressed that “human rights [are] rarely at the center of the issues,” so the FOC offers an opportunity to mainstream that conversation into policymakers’ discussions on technology.

Building resilience against digital authoritarianism

• “Where all of [us FOC countries] may strive to ensure technology delivers for our citizens, autocratic regimes are finding another means of expression,” Sherman explained, adding that those autocratic regimes are using technologies to “divide and disenfranchise; to censor and suppress; to limit freedoms, foment fear, and violate human dignity.” New technologies are essentially “an avenue of control” for authoritarians, she explained.
• At the FOC, “we will focus on building resilience against the rise of digital authoritarianism,” Sherman said, which has “disproportionate and chilling impacts on journalists, activists, women, and LGBTI+ individuals” who are often directly targeted for challenging the government or expressing themselves.
• One of the practices digital authoritarians often abuse is surveillance. Sherman said that as part of the Summit for Democracy, the FOC and other partners will lay out guiding principles for the responsible use of surveillance tech.
• Adegoke recounted how officials in Nigeria justified their use of surveillance tech by saying that the United States also used the technology. “It’s very important to have some sort of guiding principle” from the United States, he said.
• After Biden signed the spyware executive order, Juan Carlos Lara, executive director at Derechos Digitales, said he expects other countries “to follow suit and hopefully to expand the idea of bans on spyware or bans on surveillance technology” that inherently pose risks to human rights.

Addressing artificial intelligence

• “The advent of AI is arriving with a level of speed and sophistication we haven’t witnessed before,” warned Sherman. “Who creates it, who controls it, [and] who manipulates it will help define the next phase of the intersection between technology and democracy.”
• Some governments, Sherman pointed out, have used AI to automate their censorship and suppression practices. “FOC members must build a consensus around policies to limit these abuses,” she argued.
• Speaking from an industry perspective, Starzak acknowledged that sometimes private companies and governments “are in two different lanes” when it comes to figuring out how they should use AI. But setting norms for both good and bad AI use, she explained, could help get industry and the public sector in the same lane, moving toward a world in which AI is used in compliance with democratic principles.
• Lara, who also serves in the FOC advisory network, explained that the FOC has a task force to specifically determine those norms on government use of AI and to identify the ways in which AI contributes to the promise—or peril—of technology in societies worldwide.

Improving digital inclusion

• “The internet should be open and secure for everyone,” said Sherman. That includes “closing the gender gap online” by “expanding digital literacy” and “promoting access to safe online spaces” that make robust civic participation possible for all. Sherman noted that the FOC will specifically focus on digital inclusion for women and girls, LGBTI+ people, and people with disabilities.
• Starzak added that in the global effort to cultivate an internet that “builds prosperity,” access to the free flow of information for all is “good for the economy and good for the people.” Attaining that version of the internet will require a “set of controls” to protect people and their freedoms online, she added.
• Ultimately, there are major benefits to be had from expanded connectivity. According to Sherman, it “can drive economic growth, raise standards of living, create jobs, and fuel innovative solutions” for global challenges such as climate change, food insecurity, and good governance.

Katherine Walla is an associate director of editorial at the Atlantic Council.

Watch the full event

The post What to expect from the world’s democratic tech alliance as the Summit for Democracy unfolds appeared first on Atlantic Council.

But what should policymakers know about the lingering challenges that women in the region face? And what are the specific measures that can bring about real change? Below, five experts on the region provide their recommendations for strategies that can help promote gender equality and advance women’s rights across Latin America and the Caribbean.

How should Latin American and Caribbean countries begin their renewed efforts to narrow the gender gap?

Latin America and the Caribbean have historically struggled with gender inequality and discrimination, particularly against women.

Economic empowerment is a crucial way to help attain gender equality. However, achieving economic empowerment requires solutions that are designed with more than the near term in mind. It is essential to create opportunities for women in which they can earn a sustainable long-term income, and it is equally essential to design these opportunities in a way that meets the needs of all women and the girls or elderly women in their care. Regrettably, gender biases are rampant not only in the workplace but also in the policymaking sphere, which significantly hinders female candidates from reaching their full potential. According to a report by the World Economic Forum, the global gender gap in politics will take more than a century to close if the current gender biases continue. To overcome this obstacle, policymakers need to introduce targeted policies aimed at reducing gender discrimination.

Closing the digital gender gap is also an important step. According to the US Agency for International Development, 1.1 billion women and girls in middle- and low-income countries do not have access to mobile internet, putting them at a disadvantage and limiting their economic opportunities. By closing the digital gender gap and by ensuring women can gain access to digital skills and literacy, societies—and their economies—will reap significant spillover rewards.

Additionally, the issue of violence against women and girls in the region cannot be ignored. Domestic violence correlates with juvenile violent behavior, meaning that as young people grow up in the presence of domestic violence, they are more likely to replicate the same behavior later in life. Furthermore, women are vulnerable to becoming subject to emerging crimes (like trafficking) due to higher levels of insecurity. According to a United Nations report, 35 percent of women worldwide have experienced physical or sexual violence, and this percentage is even higher in Latin America and the Caribbean. To achieve true gender equality, policymakers must prioritize measures that address violence against women and girls. These measures include providing adequate support to survivors and holding perpetrators accountable for their actions.

—Isabel Chiriboga is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

What is the relationship between women’s economic empowerment and broader social issues such as poverty, inequality, and gender-based violence? How can these problems be addressed?

Economic empowerment must be understood as a holistic, cyclic process in which multiple social and economic-development dimensions are linked, building upon each other over time. It is necessary to enact immediate solutions for women in vulnerable situations. A first solution could include making cash transfer systems available to women; these systems allow them to not only survive but also thrive, by respecting and guaranteeing their decision-making capacity. A second solution could include creating systems that allow women to ensure they have a steady flow of income for the medium and long term; to accomplish this, those systems could offer them support in entering into the formal labor market or in pursuing a self-employment opportunity in specific cases. It is important that these programs target not only women but also their dependents— both minors and seniors whose care, often provided by women, presents one of the biggest barriers to women’s economic and job stability. A third solution could include economic empowerment policies that particularly address girls, giving them employment skills and protecting them from threats to their independence that loom from childhood, such as teenage pregnancies or forced marriages.

Finally, it is important to note that women’s empowerment processes in some social spaces, especially patriarchal or sexist ones, can generate conflict or violence against women. Mechanisms for preventing violence and protecting women must be provided, including social and institutional support for empowerment projects and the women at the center of them.

—Erika Rodríguez is a nonresident senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center, a professor and associate researcher at Complutense University, and a special advisor to Josep Borrell, the EU high representative for foreign affairs and security policy and vice president of the European Commission.

What policies can best address institutionalized gender biases and discrimination in Latin America’s political and official leadership structures?

To address women’s underrepresentation in politics and leadership, policymakers should look at some of the factors that contribute to a significantly lower number of women on the ballot and in official leadership structures. In other words, rather than create an expectation of more female candidates, leaders should try to address some of the persistent gender biases that present obstacles for female politicians already on the scene. The data on the various gender biases exists—and the region sees the unfortunate outcome of those gender biases: Mostly men are elected or appointed to key leadership roles.

There is copious data now available on women being more frequent targets of abuse and threats online in comparison to their male counterparts. On March 5 this year, Costa Rica’s Latina University published research that showed there is significant political digital violence toward women, with most of the attacks included in the research focusing on casting doubt on the capacity for women to be in public service, on disparaging women’s appearances, and on issuing physical threats. That kind of consistent harassment becomes a deterrent for women when they decide whether to take a step forward and aspire to political leadership roles. That digital violence should be addressed.

Policies aimed at reducing gender discrimination should not only focus on recruiting and electing, but also on supporting and protecting women in public leadership roles. Those policies can offer an effective strategy to minimize existing gender inequality and create a safer and more democratic environment.

—Erika Mouynes is the chair of the Atlantic Council Adrienne Arsht Latin America Center’s Advisory Council and former Panamanian minister of foreign relations.

How can the development of digital skills and literacy among women in Latin America help promote innovation and gender equality? How can public-private partnerships help foster women’s digital literacy?

In Latin America, women still lag behind men in terms of their access to the internet and mobile broadband, mastery of digital skills, and representation in digital jobs. Leveling this playing field is an economic imperative—it can help grow the pool of qualified talent for local and regional companies, empower women to access good-paying jobs, and close gender gaps in pay and labor-market participation, which are directly correlated with gross domestic product growth. This economic imperative has captured the attention of business leaders across the region who recognize that businesses benefit from employing qualified women and that limited digital parity is a drag on growth.

But while the economic case for closing the digital gender gap is strong, it’s important to look at it as a social imperative too. Empowering women with digital skills and digital literacy allows them to successfully navigate an increasingly digital world. Indeed, digital literacy is now needed to open a bank account, access health care, take full advantage of quality education opportunities, grow a business, and thrive at work. Around the world, women are known to invest more in their families and their communities than men. This means that the benefits of closing the digital gender gap will generate positive spillover effects that will be felt by societies and economies more broadly.

The private sector has a vested interest in closing the digital gender gap. My experience working in the consulting sector and with clients has shown me firsthand that diverse teams think more creatively and operate more dynamically. This, combined with the many other socioeconomic benefits of gender parity, makes it clear that the private sector must play a role in closing the digital gender gap and that the business case for doing so is strong.

The private sector has an important role to play as a partner for governments. Private-sector businesses, as significant employers, can help public officials design better policies that take into consideration the skills gaps in the labor market. And the private sector can provide insights about how policies—related to everything from health to education—impact women every day. Finally, the private sector can lead by example by creating an environment in which women can thrive and learn and using peer pressure across the sector to push all companies to get on board.

—Ana Heeren is a member of the Atlantic Council Adrienne Arsht Latin America Center’s Advisory Council and senior managing director at FTI Consulting.

How do crime and violence affect women and girls in Latin America and the Caribbean? What strategies can governments employ to help prevent, address, and respond more effectively to that violence?

In Latin America and the Caribbean, women and girls are at greater risk of facing violence. According to estimates conducted in 2018, one in four women in the Americas have experienced physical and/or sexual violence by their partner. Recent evidence shows a correlation between juvenile violent behavior and exposure to domestic violence during childhood. Women also report higher levels of insecurity: A study in three cities in the region showed higher levels of concern among women than men regarding their safety while taking public transportation (72 percent versus 58 percent in Buenos Aires, 61 percent versus 59 percent in Quito, and 73 percent versus 59 percent in Santiago). In addition, women and girls are more likely to be affected by emerging crimes. Women and girls constitute the majority of victims of human trafficking. Women environmental or human-rights activists also face attacks (1,698 violent acts in Mexico and Central America from 2016 to 2019), and about nine out of ten women have experienced or witnessed online violence.

My team at the Inter-American Development Bank proposed a strategy to respond to this complex problem in a coordinated way. The approach includes initiatives focused on empowering women and preventing violence. It includes recommendations on how to ensure that any actions or initiatives intended to solve this problem are targeted toward the most vulnerable women and girls and are tailored toward the specific social, political, and economic contexts of each community. It also includes guidance on strengthening the capacities of the citizen-security and justice sector to detect, prevent, address, and respond to violence. Moving forward, it is necessary to have better data to generate evidence-based policies.

—Nathalie Alvarado is a technical leader and coordinator of the Citizen Security and Justice Cluster at the Inter-American Development Bank.

The post What policymakers should know about improving gender equality in Latin America and the Caribbean appeared first on Atlantic Council.

In politics and positions of power, the lack of equitable representation of women is striking. Women represent 49.7 percent of the world population, yet only twenty-seven countries have a female leader as of February 2023.2 Brazil, which elected its first and only woman president in 2011, has seen slow progress in ensuring greater female participation in politics. Political violence against women, among other factors, is a deterring factor for women’s political participation.

Political violence is not a new phenomenon, nor it is exclusive to women. However, evolving analysis has identified differences between political violence generally and political violence against women. The latter is directed at women with the intent of restricting their political participation and active voice, while also generalizing women’s participation as “wrong.” In the Brazilian context, political violence against women is a “physical, psychological, economic, symbolic, or sexual aggression against women, with the purpose of preventing or restricting access to and exercise of public functions and/or inducing them to make decisions contrary to their will.” As such, political violence against women plays an important role in deterring women’s active participation in politics—and even more daunting for black, indigenous, or LGBTQI+ (lesbian, gay, bisexual, transgender, or queer) women.

Brazil has a unique opportunity to adjust its legislation and reframe the incentives in the political sphere tackle this issue now, ahead of municipal elections in 2024. Doing so will ensure greater and more equitable political participation, enrich the political debate, strengthen the legislative agenda, and further solidify the country’s democratic ethos, even if other challenges to democracy remain. This report presents solutions Brazil could take to reach this more representative and resilient version of democracy.

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post An imperative for women’s political leadership: Lessons from Brazil appeared first on Atlantic Council.

Executive summary 

The US humanitarian assistance and disaster relief (HADR) system—well practiced and extensively developed—could further serve US and partners’ needs in Latin America and the Caribbean (LAC) and beyond through targeted improvements. Based on our experience as HADR practitioners with operational and academic expertise, we share insights from many years of working with partners in the Americas. The task is urgent: fragile governments and organizations further impacted by COVID-19 and climate change have exposed HADR deficiencies that need to be rapidly strengthened. Redoubling the US’s HADR commitment to allies and partners can also have strategic benefits during a period of renewed competition with the People’s Republic of China. 

We believe that the United States can strengthen its HADR work globally, and particularly with LAC countries, through partnership and relationship building as well as education and exercises. By deepening its strengths and address- ing room for improvement, the United States can remain the partner of choice for LAC countries and conserve its positional advantage over China and other strategic competitors. 

How can LAC and partner nations (such as the United States), nongovernmental organizations, and regional and other global organizations strengthen their abilities to respond to natural disasters? What can the United States do to improve its disaster preparedness and response in LAC? And what can Washington learn from Beijing’s approach to disaster assistance in LAC? 

In crafting this report to address these questions, we drew from a roundtable discussion, verbal and written consultations with subject matter experts, and written material. A full description of the methodology is provided in the appendix. 

The findings of the report include eight recommendations grouped under two mutually complementary areas: (1) partnership and relationship building, and (2) education and exercises. Not only are these recommendations timely and relevant for HADR practitioners, but taking these steps would strengthen Western hemispheric security by investing in the region’s infrastructure and human capital. As the United States and its LAC partners consider future room for cooperation and collaboration, HADR work will form an indispensable centerpiece of their strategies. 

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The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post Humanitarian aid: Defining new areas of US-LAC collaboration appeared first on Atlantic Council.

In his keynote remarks, Congressman Hill briefly discussed his experience with wrongful detention after one of his constituents, Majd Kamalmaz, was detained in Syria. He spoke to the importance of expeditiously recognizing US persons who have been wrongfully detained, the role of the US government to ensure that deterrents are in place and that punishments are effective, and the importance of the coordination between the US legislative and executive branches in working to support American detainees and their families. The Congressman’s concerns were echoed by the remarks of Congresswoman Stevens, who currently serves as Co-Chair of the New American Hostage Task Force. Specifically, she discussed her efforts to free Paul Whelan from his detention in Russia and the importance of coming together in advocacy.

The subsequent panel was moderated by Semafor Founding Editor at Large Steve Clemons and featured notable advocates for past and current detainees. The key points from the discussion are summarized below.

The nature of global hostage-taking has changed, and the US response must evolve accordingly.

Diane Foley—mother of James Foley and founder of the James W. Foley Legacy Foundation—explained that the involvement of state actors in wrongful detentions renders these cases more complex and necessitates that the US government adapts to the new set of challenges it presents. She held that wrongful detention abroad is not a purely human issue; it affects national security and warrants a comprehensive review of the US hostage enterprise.

Foley’s concerns were similarly felt by Elizabeth Whelan—advocate and sister of Paul Whelan, the former US marine who has been detained in Russia—who emphasized the “need for speed” in the US response to these cases. She noted Russia’s attempts over time to “up” the value of her brother to gain more leverage against US efforts toward his release. She proposed that a series of “red flags” should be established to notify the government that there is a possibility of a US person being wrongfully detained by a foreign government so that cases can be identified and escalated more swiftly.

On the point of preventing future detentions, Ryan Fayhee—partner at Hughes Hubbard & Reed LLP and former US Department of Justice national security official—called for the use of existing deterrence methods, claiming that “foreign governments need to know that they will be isolated from the global economy if they take Americans.” He added that while wrongful detentions of US persons have been treated on a case-by-case basis, the use and expansion of deterrence methods would interrupt the rapid acceleration of this practice.

Looking to the future, both Foleyand Whelan mentioned the need for the US government to fully commit to bringing detainees home, citing the feeling that their loved ones were “abandoned” in the early stages of their detention. Foley added that the US government is obligated to ensure that proper safeguards are in place for US persons traveling internationally.

Despite their criticisms, the panelists all acknowledged the progress that has already been made, including the passage of the Robert Levinson Hostage Recovery and Hostage-Taking Accountability Act in 2020, and the establishment of the Hostage Recovery Fusion Cell in 2015.

A solutions-oriented approach is crucial to current and future cases.

Regarding the politicization of wrongful detention cases, Whelan recalled the many negative responses to WNBA player Brittney Griner’s release from Russian detention as a result of a “prisoner swap,” while Paul Whelan remained detained. She disavowed those using her brother’s case for political gain and encouraged collaboration to find a path forward, stressing the need to put “people in front of policy.” To this end, she stressed the importance of bipartisanship, saying that politicizing these cases plays into the hands of captors.

When discussing practical improvements to be made, Foleysuggested further integrating the Hostage Recovery Fusion Cell so that more coordination is encouraged between the entities that compose it and engagement with different branches of government is encouraged. The Cell is currently housed within the Federal Bureau of Investigations (FBI), which coordinates the work of staff within the FBI, the Department of State, the Department of Defense, and the Department of the Treasury.

When asked about the role of legislators, Fayhee emphasized the utility of constructive conversations between advocates and representatives in Congress. He highlighted the number of policymakers who care about this issue and are willing to engage with the executive branch to elevate cases. Foley and Whelan agreed, adding that they are “always looking for champions” for this cause on Capitol Hill.

Efforts should be made to empower detainees and their advocates.

The panelists stressed the need to elevate the profiles of wrongful detention cases so that families and advocates may have strategic conversations with officials and lawmakers. More visibility for individual cases also incentivizes information sharing between the executive branch, lawmakers, and the families of detainees. Foley cited efforts to codify an official National Hostage and Wrongful Detainee flag as an example of pursuits to increase attention to the cause.

In addition to the challenges wrongful detentions pose to international affairs and diplomacy, they also inflict a great humanitarian cost, both to the persons detained and their families and advocates. Foleyand Whelan noted the lack of federal resources to support families advocating for their loved one’s release, with Fayhee adding that “no family should go bankrupt” lobbying for a detainee’s safe return. They suggested that Congress set aside funds to mitigate the costs of traveling to Washington for advocacy. Fayheeand Whelan also highlighted the importance of long-term post-isolation support for former detainees, noting that they are often subject to horrific conditions while in confinement and will likely experience post-traumatic stress upon return.

Britt Gronemeyer is a Young Global Professional with the Middle East Programs at the Atlantic Council.

Alana Mitias is Assistant Director of the Strategic Litigation Project at the Atlantic Council.

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Jump to an expert reaction

Leland Lazarus: Rather than wagging the finger at Honduras, the US can take some practical steps to help Taiwan

Kitsch Liao: This is not as big a blow to Taiwan as it would have been in years past

Isabel Bernhard: Which country will switch sides next? Keep an eye on Paraguay.

Jason Marczak: Another reason for the US to invest more in Central America

Parsifal D’Sola: China’s gain points to the United States’ loss

María Fernanda Bozmoski: With the Northern Triangle divided on China, US strategy becomes more complicated

Rather than wagging the finger at Honduras, the US can take some practical steps to help Taiwan

Honduras’s decision, while unfortunate, was not unexpected. As a presidential candidate, Castro signaled that she would foster ties with Beijing, although that talk subsided after her election. Earlier this year, Honduran Foreign Minister Eduardo Enrique Reina met with Chinese Vice Minister of Foreign Affairs Xie Feng on the sidelines of Brazil’s presidential inauguration. The fact of the matter is that it makes hard economic sense for countries to do business with the world’s second-largest economy, especially countries like Honduras looking to boost economic growth to deal with income inequality, security, and climate change. 

The most immediate benefit Honduras will likely receive is Chinese financing for the Patuca III hydroelectric dam, which would provide much-needed electricity in rural parts of the country. In January, China’s ambassador to Costa Rica, who oversaw unofficial engagement with Honduras, said there was no possibility of such financing while Honduras remained a diplomatic ally of Taiwan.

Honduras will also be able to export its core commodities such as coffee, bananas, and seafood to the large Chinese market. Costa Rica, Panama, El Salvador, and the Dominican Republic have all seen their exports increase after establishing relations with China. Honduras will also likely join the Belt and Road Initiative, gaining access to concessional loans that are often hard to get from the World Bank, International Monetary Fund, or Inter-American Development Bank. China may also donate equipment and offer law enforcement training to Honduras’s national police to boost public security, which China has done in Nicaragua and elsewhere.

For the United States, rather than criticizing countries that switch sides, a far better strategy would be to encourage countries to maintain unofficial economic relations with Taiwan even as they make Beijing a new diplomatic ally. Several countries around the world still have Taiwan Economic and Cultural Offices. They should work collectively with regional and international partners to protect themselves from possible economic coercion from China. 

It will be interesting to watch the upcoming presidential elections in two other Taiwan allies in the region: Paraguay (April 30) and Guatemala (June 25). If the opposition wins in both countries, they may make the same economic cost-benefit decision as Honduras’s Castro. 

But measuring Taiwan’s success based on the number of diplomatic allies it has compared to China is a losing battle. Taiwan can always do a better job at selling its narrative and importance globally. The global role of TSMC as the manufacturer of 90 percent of the world’s most advanced chips has really come to the forefront in recent years. But Taiwan also has a great story as a foreign-assistance provider; its International Cooperation and Development Fund engages in agricultural technical assistance, digital connectivity, public health, and language teaching. In short, it’s not the quantity of diplomatic allies that count; it’s the quality. Taiwan and the United States should work together to tell Taiwan’s story to the world so that countries will keep Taiwan as a key partner, even if it’s no longer a diplomatic ally.

—Leland Lazarus is a nonresident fellow at the Global China Hub and associate director for national security at Florida International University’s Jack Gordon Institute of Public Policy. He formerly served as special assistant and speechwriter to the commander of US Southern Command and as a US State Department foreign service officer in China and the Caribbean.

This is not as big a blow to Taiwan as it would have been in years past

Castro’s announcement on Twitter marks Honduras’s second attempt to switch recognition to the PRC. Castro first attempted this in January while attending Brazilian President Luiz Inácio Lula da Silva’s inauguration. However, significant domestic opposition arose because of the widespread technical assistance Taiwan provides to Honduras, especially in agriculture, including shrimp farming, papaya, and fisheries.

Officials from Taiwan’s Ministry of Foreign Affairs claim to not have received an official notice regarding the severing of ties, suggesting that this might be a last-ditch negotiating tactic by Castro to try to secure previously requested financial aid. The Castro administration has also requested five hundred million dollars in aid from Taiwan to build a second hydroelectric dam; Sinohydro Corporation, a Chinese state-owned firm with questionable profit motives, already helped Honduras build the first Petuca III hydroelectric dam.  

A formal shifting of Honduras’s recognition to the PRC would have a smaller impact on Taiwan’s ability to preserve its international space than it would have before the international developments of the past year. While Honduras has long been an important ally for helping Taiwan raise awareness of its unique situation within international fora such as the United Nations, Russia’s full-scale invasion of Ukraine has raised Taiwan’s profile significantly as the international community draws comparisons between the situations in Ukraine and Taiwan. Furthermore, then US House Speaker Nancy Pelosi’s visit last year and the subsequent Chinese military exercise generated a significant outpouring of support and created opportunities for Taiwan to formalize and upgrade its various existing engagements with non-diplomatic partners in Europe and elsewhere. Taiwan in the last several years has been working to expand these working-level relationships on a bilateral and multilateral level, focusing on countries sharing similar values and facing similar threats.

These changing circumstances have all contributed to a reluctance on Taiwan’s part to accede to the ever-increasing demands for loans and aides from the Castro administration. While losing Honduras as an ally would be regrettable for Taiwan, given their long history of cooperation and exchanges, Taiwanese leaders are weighing the potential costs of maintaining such ties with the potential gains of channeling their efforts elsewhere.

—Kitsch Liao is an assistant director at the Global China Hub.

Which country will switch sides next? Keep an eye on Paraguay.

There are a couple of elements that are critical to take into consideration when assessing which Taiwan allies in Latin America and the Caribbean could switch diplomatic allegiances next.  

First, Honduras’s switch did not catch Taiwanese authorities off guard. Taiwan’s government had been working to strengthen relations in the past few months, particularly through Vice President Lai Ching-te’s visit to Honduras in January. A Taiwanese news outlet quoted an unidentified insider as saying that the warning light had been “red” for some time.

Second, Honduras’s switch was likely motivated more by political than economic considerations. After entering into a free trade agreement with Taiwan, Honduras ran an average yearly trade surplus of sixty million dollars with Taiwan. Although Honduras will almost certainly receive more trade and investment opportunities from China because of its diplomatic decision, Honduras may soon run a trade deficit with China, as other regional countries have done. 

Therefore, in trying to identify the next Taiwan ally in Latin America likely to switch, look for a country that recently had a high-level meeting with Taiwanese authorities and may have an upcoming election, regardless of its economically beneficial relationship with Taiwan. That suggests Paraguay (which will hold elections in April and saw its president travel to Taiwan in February for a state visit) or potentially Guatemala (which is expected to host Tsai later this month ahead of its June elections) may jump ship. 

Paraguay’s switch to diplomatic recognition of China seems more likely than ever, as the principal opposition candidate in the neck-and-neck election contest is vowing to derecognize Taiwan. Meanwhile, there was evidence of significant behind-the-scenes Chinese pressure on Paraguay to derecognize Taiwan during the COVID-19 pandemic in exchange for vaccines and other assistance, as well as an explicit Paraguayan request for one billion dollars in Taiwanese investment to remain allies.  

—Isabel Bernhard is an assistant director at the Adrienne Arsht Latin America Center.

Another reason for the US to invest more in Central America

Honduras’s decision to switch diplomatic relations with China—although a seismic moment for Taiwan as the number of its regional allies cascades—was not entirely a surprise. Castro previewed this possible move during the campaign before doing an about-face when a groundswell of pressure mounted in response. 

In the end, it’s a pragmatic move for the Honduran government. China is increasingly a robust regional economic partner, and Honduras does not want to be left behind. The move, for Honduras, is about diversifying its economy and its diplomatic partners as other countries in Central America have done in recent years. Since 2017, Panama, El Salvador, and Nicaragua have all switched to relations with China. Keep an eye on Guatemala. It’s a strong Taiwan ally but presidential elections this year could lead to a rethink as China’s influence grows in Central America.

Honduras’s move is yet another reason for the United States to advance concrete policies that incentivize US investment in Central America and to move nearshoring from rhetoric into reality. After all, China will use this moment to step up its own investments in the region. 

From a bilateral perspective, diplomatic recognition of Taiwan will not alter the course of US-Honduras relations. US engagement with the new Honduran government—a 180-degree turn from its predecessor—will be especially important in the months ahead as Title 42, which allowed the United States to immediately expel migrants because of COVID-19 concerns, is set to expire. Joint work to avoid a surge in migration will be a US priority.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

China’s gain is the United States’ loss

To this day, Taiwan remains a hot topic in Central America and the Caribbean because of the United States. Counting Honduras’ break with Taiwan as official, six of the remaining thirteen countries that recognize Taiwan are in Central America or the Caribbean. Without US influence —sometimes with carrots, other times with sticks—odds are that every country in Central America and the Caribbean would have shifted recognition to Beijing a long time ago. From an economic standpoint, there’s simply no reason why a small state like Honduras should shun Beijing over Taipei. Shifting recognition is a pragmatic choice by the leadership in said country, a decision usually sweetened by PRC investment commitments. Since “national reunification” is a fundamental goal for the PRC, it dedicates vast resources and diplomatic efforts to push countries to abstain from any type of official contact with Taiwan. If there is one key takeaway from Tegucigalpa’s decision to break with Taipei, it is not so much greater PRC influence in the region but a loss of influence by the United States. 

—Parsifal D’Sola is a nonresident senior fellow in the Atlantic Council’s Global China Hub and the founder and chief executive officer of the Andrés Bello Foundation–China Latin America Research Center in Bogotá, Colombia.

With the Northern Triangle divided on China, US strategy becomes more complicated

As a presidential candidate, Castro’s foreign-policy plan previewed her intentions to switch recognition to Beijing, but those plans were paused once she assumed office. While Honduras’s overt rapprochement to China is not a surprise—Reina met with Xie in Brasilia during Lula’s inauguration to talk about a hydroelectric dam in Honduras—the move raises alarm bells throughout the hemisphere. It also further distances El Salvador and Honduras from neighboring Guatemala, which will have an effect on a potential cohesive US strategy towards the region. Historically in Central America, the establishment of relations with China has come with little to no transparency and massive infrastructure projects that generate little to no local jobs. The back-and-forth in Honduras’s foreign policy exemplifies the tough position in which Taiwan’s remaining Latin American and Caribbean allies are in, with pressure from the United States, China, and their own citizens. 

Additionally, Honduras’s foreign-policy shift reflects domestic pressures and the effect on foreign direct investment and investor appetite for recent and proposed reforms—including a fiscal reform currently in discussion in Congress.

—María Fernanda Bozmoski is the deputy director of programs at the Adrienne Arsht Latin America Center.

The post Experts react: Honduras is establishing ties with China. What should Taiwan and the US do? appeared first on Atlantic Council.

Fifty-three economies—including Argentina, Egypt, Pakistan, and Nigeria—are in an especially fragile condition because they have either defaulted on some of their debts, or have debt levels that the IMF considers unsustainable. Given their 5 percent share in the global economy, this may not sound alarming. However, considering the contagion phenomenon in financial markets—and the fact that these fifty-three economies are home to about 20 percent of the world’s population—debt distress, and its social, political, and economic ramifications could pose serious threats to the global economy. Acknowledging these dire conditions, the IMF has redoubled its efforts to help its member countries avoid the worst of debt crises.  

How does IMF financial assistance work? 

The IMF’s financial assistance is intended to provide financial support for countries that are experiencing or at risk of financial crises, including balance of payment (BoP) crises, banking crises, currency crises, or external/internal debt crises. The IMF’s financial assistance provides breathing space for governments to devise and gradually implement corrective policies. Hence, the IMF’s financial assistance is always associated with a set of reform policies tailored for the country in crisis. These may include monetary policy and exchange rate policy reforms, and other sets of economic-wide reforms broadly referred to as Structural Adjustments or Reforms. By implementing these reforms, the country is expected to restore long-run financial stability and growth in its economy and rebuild domestic and foreign investors’ faith in the country’s economy.  

Table 1 provides a breakdown of the IMF’s financial assistance accounts and types. Broadly speaking, IMF financial assistance can take three forms. First is lending at an interest rate determined by the average of interest rates in world major currencies. Loans extended under the General Resources Account (GRA) are of this type. Second is lending at concessional terms which are extended at very low or no interest rates to low-income economies. Financial assistance through the Poverty Reduction and Growth Trust (PRGT) falls under this category. The third form of IMF financial assistance is through the Catastrophe Containment and Relief Trust (CCRT). This is a debt relief grant for heavily indebted, low-income economies facing debt distress and financial turmoil. Figure 2 shows the value of all IMF financial assistance between 2020 and 2022 for each type and recipient country. More than three-quarters of all IMF financing during the 2020-22 period was through the Flexible Credit Line (58 percent of the total) and the Extended Fund Facility (19 percent of the total). 

Latin America and the Caribbean have been the IMF’s largest clients. 

In fiscal year (FY) 2022, the IMF provided $113 billion of financial assistance to twenty three of its member countries, 90 percent of which is dedicated to Latin American and Caribbean economies. Two economies in Latin America accounted for $91 billion (or 80 percent of the IMF’s financial assistance in 2022): Argentina with $43 billion and Mexico with $48 billion. FY2022 was not an anomaly in the IMF’s financial assistance pattern. As seen in Figure 3, 71 percent of all IMF financial assistance between 2020-22 (including FCL) was allocated for the Latin America and Caribbean region.

However, it is important to note that the type of financial assistance IMF has provided in the form of FCL —for example to Mexico and Columbia— is drastically different in nature from the assistance provided to Argentina in the form of EFF. In particular, FCL is designed as a crisis-prevention and crisis-mitigation credit line for countries that have strong policy frameworks and solid track records in their economic performance. Hence, the country may or may not decide to use all or even a portion of this line of credit that is allocated to them. For example, Mexico has drawn nothing from the total amount of 80.214 billion SDR made available to them through FCL facility between 2020 and 2022. In contrast, Argentina has drawn 17.5 billion SDR from the 31.914 billion SDR EFF assistance provided to them. It must be noted here that IMF extends EFF to a country facing major medium-term BoP challenges because of various structural issues that will necessitate some time to address. IMF’s lending commitments site provides updated detailed information on the type and amount of assistances IMF has allocated for each member country from its first day of inception, the amount drawn from the allocated funds, and the outstanding balances.    

After Latin America, the Sub-Saharan Africa region is the IMF’s main client. It is followed by a few countries in other regions such as Egypt in the Middle East and North Africa, and Pakistan in South Asia, which are highlighted in Figure 4.

The IMF should reexamine the uneven distribution of its financial resources.

The case in hand is the IMF’s uneven response to economies in Latin America versus those in Sub-Saharan Africa. While both regions suffer frequently from debt and BoP crises, Latin American economies tend to get larger IMF packages than African economies, even when their IMF quotas are considered. For example, Argentina’s most recent IMF package (arranged March 25 2022) was about $43 billion, which is about 1,000 percent of its quota and $950 million per capita. Moreover, program aimed to help Argentina repay its outstanding IMF debt from an unsuccessful 2018 $57-billion IMF program.  

In contrast, Zambia’s most recent IMF package (approved August 31 2022) was about $1.3 billion, or 100 percent of its quota and about $73 million per capita. A careful look at the IMF’s financial assistance history will surface many more such examples of potentially uneven treatment. Pakistan and Egypt are two other countries that have received substantial and frequent financial assistance from the IMF over the past decades while other countries in their respective regions have had less luck in that front.  While citizens and policymakers in Latin America, Pakistan, and Egypt may reject the notion that the IMF has treated them favorably over the years, a close look at other countries such Sri Lanka and Lebanon provides a glimpse of what could happen to economies in crises when IMF assistance is not immediately there to support them.  

Conclusion 

The global economy is facing multifaceted challenges that are increasingly interconnected and transnational in nature. Bretton Woods Institutions, such as the IMF and the World Bank, are tasked with addressing many of these challenges—including the debt distress faced by many low income and emerging economies. However, as shown above, their responses to crises have not been equitable across different regions and countries. As firefighters of the global economy, these institutions should respond to crises on equitable terms across all their members. Otherwise, they risk being viewed as politically motivated, undermining their effectiveness and relevance in the governance structure of the global economy and financial relations.  

Recent debt relief grants allocated to many low-income economies in Sub-Saharan Africa through the CCRT and the last month’s visit of IMF’s managing director, Kristalina Georgieva, to Africa and engaging with African leaders are steps in the right direction. However, they must be followed by more favorable and creative financing schemes for debt-distressed low-income African economies, where debt vulnerabilities were exacerbated by the global pandemic and skyrocketing global food and energy prices. 

Amin Mohseni-Cheraghlou  is a macroeconomist with the GeoEconomics Center and leads the Atlantic Council’s Bretton Woods 2.0 Project. He is also an assistant professor of economics at American University in Washington DC. @AMohseniC

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This is not just a matter of winning UN votes and scoring political points at international forums. The reluctance of countries throughout the Global South to join Western sanctions significantly undermines efforts to isolate Russia, while providing Moscow with the financial and material lifelines to maintain the war in Ukraine indefinitely.

Attitudes in the Global South toward Russia’s Ukraine invasion are being shaped by a range of factors including economic and geopolitical interests along with widespread suspicion of American foreign policy and historic anti-Western sentiment dating back to the colonial era. Russia has skillfully exploited this post-colonial perspective by framing the invasion of Ukraine as a reaction to what it terms as yet more expansionist Western interference. As the war enters its second year, Ukraine should be doing much more to engage these non-Western audiences and make its voice heard.

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Ukraine has limited experience of rallying international support and has previously focused its efforts almost exclusively on the West. In the three decades since the country regained independence, Ukrainian politicians, activists, and journalists have spent comparatively little time communicating with people in Latin America, Africa, and Asia, where awareness of Ukraine is still often minimal. Ukraine now needs to develop a strategy that can rally the nations of the non-Western world to its side.

First of all, it is absolutely crucial to keep Ukraine at the heart of the debate. Across the Global South, it is common to witness public discussions about the Russian invasion that barely address Ukraine at all. Instead, the focus is frequently on Western colonialism, globalization, and other broad geopolitical themes. Ukrainians should not hesitate to insist that conversations about their country’s plight not get sidetracked by extraneous historical grievances.

Over the past year, Ukraine’s limited efforts to influence opinion in the Global South have concentrated on highlighting the imperial ambitions underpinning Putin’s current invasion while raising awareness of Russia’s own long history of colonialism as a major European empire. This approach certainly makes some sense, but too much emphasis on Russia’s colonial past risks shifting the conversation away from today’s Ukraine.

Another important ingredient shaping the debate in the Global South is the role played by the Soviet Union as a supporter of anti-colonial liberation movements during the second half of the twentieth century. Putin’s Russia has made much use of this favorable Soviet legacy, using it to garner goodwill and to emphasize its own anti-Western credentials. This ignores the obvious imperialism of the USSR itself, and overlooks the fact that Soviet-era Ukraine also contributed significantly to liberation movements throughout Africa and Asia.

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While it is essential for Ukrainians to correct the historical record regarding Russian imperialism, it is also vital to stress Ukraine’s current importance for the Global South. First and foremost, this means highlighting Ukraine’s status as one of the world’s emerging agricultural superpowers and a major prewar contributor to global food security.

As Ukraine seeks to influence opinion among non-Western audiences, the country must make maximum use of its limited resources. For example, officials in Kyiv should be doing much more to engage with the thousands of professionals throughout Africa, Asia, and Latin America who studied at Ukrainian universities before going on to have careers in their homelands. This pool of alumni is a potentially significant but largely untapped resource that could bring a degree of authenticity to the debate due to their personal experience of Ukraine.

Ukrainian nationals with family ties to the Global South can also contribute to greater international understanding of the issues at stake in today’s Ukraine. As one of the most prominent members of the Afro-Ukrainian community, politician and Olympic champion wrestler Zhan Beleniuk traveled to Africa in late 2022 as part of Ukraine’s fledgling outreach efforts. Others with similar backgrounds should be encouraged to speak up on behalf of Ukraine.

Ukraine’s success in shaping opinion throughout the Global South will hinge largely on the country’s ability to engage with the media. This is one area where the Kremlin enjoys overwhelming advantages. While Russia’s RT and Sputnik platforms have limited reach and minimal credibility among Western audiences, they enjoy considerable prominence and are often well-received in much of Asia, Africa, and Latin America.

Ukraine cannot hope to compete with the Kremlin’s billion dollar media budgets and must instead build relationships with existing local mainstream media. Brazil’s TV Globo is the second-largest commercial TV network in the world and can bring Ukrainian perspectives to huge domestic Brazilian audiences. Likewise, engagement with Spanish-language channels can help reach millions across Latin America. A comprehensive media strategy is needed in order to close the information gap and counter the current dominance of Russia’s narratives in the non-Western information space.

Ultimately, the truth is on Ukraine’s side. The good news it that there is very little evidence of actively anti-Ukrainian sentiment in today’s Global South. It should be entirely possible to persuade far more people that Ukraine’s cause is righteous and worthy of support. However, this will require a concerted effort that is currently lacking. Simply telling non-Western audiences that the Russians are also imperialists may be satisfying, but it is not nearly enough.

Mitchell Polman is a public diplomacy and international relations commentator.

Further reading

UkraineAlert Feb 20, 2023

‘You cannot outlast us’: Biden’s Kyiv visit sends strong message to Moscow

By Peter Dickinson

US President Joe Biden’s bold surprise visit to wartime Kyiv sent a strong message to Moscow that time is not on Putin’s side and Russia should not pin its hopes on a weakening of Western resolve to stand with Ukraine.

Conflict Freedom and Prosperity

UkraineAlert Jan 28, 2023

Poland is leading Europe’s response to the Russian invasion of Ukraine

By Diane Francis

Poland was the unsung hero of the recent landmark decision by Berlin and Washington to provide Ukraine with tanks as Polish leadership continues to shape the European response to Russia’s genocidal invasion.

Conflict Economic Sanctions

UkraineAlert Mar 8, 2023

Ukrainians will never surrender. How long can they count on the West?

By Serhiy Prytula

Ukraine’s remarkable resistance during the first days of the Russian invasion convinced the democratic world to back the country but with Putin now preparing for a long war, continued Western resolve is vital writes Serhiy Prytula.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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This article was originally published in Spanish by El Heraldo de Mexico.

Russia’s war against Ukraine turned one year old on February 24. The conflict is generating a profound geopolitical realignment and, if it does not end soon, it is very possible that it will directly involve other powers and create an even deeper world division.

The world is now divided between countries that show solidarity with Kyiv, those that are indifferent—supposedly neutral [lukewarm]—and those that excuse or support Russia’s aggression. The latter are few.

Solidarity with Ukraine ranges from symbolic displays like lighting public buildings yellow and blue, to imposing economic sanctions on Russia, to direct aid in the form of financial resources, intelligence, and weapons.

The solidarity flowing to Ukraine constitutes the largest military mobilization in Europe since the Second World War. Support goes from countries like Canada and the US, to countries that were under threat and under the Soviet yoke during the Cold War, but also from countries that were until recently neutral. As an example, Morocco, broke its neutrality and announced in December that it would transfer its T-72 tanks to Ukraine.

It is estimated that Russia deploys 300,000 troops inside Ukraine. British intelligence estimates that Russia has lost 40 percent of its military strength and has already mobilized 97 percent of its deployable army, which has it very stressed. The Ukrainian counteroffensive, if well equipped, will make a significant change this Spring.

Countries willing to help Russia are attracting more and more international attention. Iran has agreed to receive 24 Russian Sukhoi Su-35 fighter jets in exchange for continuing to send drones and missiles. As a consequence, the EU announced sanctions against companies that trade with Iran, especially electronics. The most direct pressure came from the US, whose special forces intercepted a shipment of Iranian weapons destined for Yemen and forwarded them…to Ukraine.

Of all the countries that could support Russia, China is the only one that could drag out the conflict. Last week, the Chinese foreign minister met Putin in Moscow. Chinese military supplies—possibly drones and ammunition—would likely flow only with very favorable conditions for China—such as permits to exploit mineral areas in Siberia and/or the Arctic—but in the Russian perspective, these concessions will likely be acceptable to continue their war.

For China, having the option to support Russia is a strategic geopolitical opportunity, as it puts it in a position to 1) gain access to land and resources it longs for; 2) condition its support on a (violent) “reunification” of Taiwan; 3) prolonging the conflict could test the level of resolve and even the military capacity of the US and Europe, to intercede for Taiwan, although, on the other hand; 4) withholding it, could allow Russia to collapse, to later take over Siberia. There are many options, all very tempting for the Chinese Dragon.

Mexico continues in a supposedly neutral, lukewarm, position that does not benefit it in its relationship with Washington or with Europe. For countries with strong resistance to providing military aid there are also options: implement sanctions and donate humanitarian aid to relieve the Ukrainian civilian population. Unfortunately, it will be the people of Mexico, not just the current administration, who will go down in history as “lukewarm.”

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Security

DFRLab confirms increased Russian air force activity as Kremlin strives to achieve air dominance

Russian army continues to pressure Ukraine in Bakhmut

Tracking narratives

Volunteer Russian unit fighting for Ukraine reportedly infiltrates Bryansk

Kremlin-linked Telegram networks coordinated to spread disinformation around the world

Media policy

Report examines Russia’s decentralized approach to internet censorship

DFRLab confirms increased Russian air force activity as Kremlin strives to achieve air dominance

The DFRLab confirmed that the Russian General Staff has intensified its air power in recent weeks across airfields in Crimea and Rostov Oblast. Satellite imagery collected by the DFRLab throughout February indicates that Russian air forces have increased their aerial activity at the Saki military airbase in western Crimea. Several MiG and Sukhoi class fighter aircraft have been identified in standby positions or on the runway.

The DFRLab’s findings are consistent with those published by open-source researcher Brady Africk, who identified seven different instances of aircraft located in the south of Ukraine on Sentinel-2 satellite imagery. The European Space Agency’s satellite imagery also serves as open-source evidence of the aircraft’s direction, located in the different color bands of Sentinel-2.

In addition, explosions reported at the Yeysk military air base in Krasnodar Krai further suggest the Russian army has been increasingly intensifying its air maneuvers. Geolocated footage of a Sukhoi-25 fighter aircraft near Luhansk indicated that further maneuvers can be expected from Russia’s western air base of Millerovo. The DFRLab also assessed that air activity possibly occurred during the last week of February at a seemingly deserted airfield south of Luhansk. Satellite imagery shows that although the meteorological conditions in January and February were mostly snowy, the main runway and several pads dedicated to aircrafts and helicopters were consistently clear of snow. Satellite imagery has not yet detected aircraft at the site, however, so it is unclear what class of aircraft is currently deployed in this airfield. Nevertheless, the operation of MiG and Sukhoi class fighters could be responsible for the melting snow on the pads.  

Google Earth imagery from 2021 showed the airbase in dire condition, which could support the claim of its low military activity.

As battles intensify to seize Bakhmut, the southern air base near Luhansk could serve as a strategic advantage for the Russian armed forces as it requires less fuel and maneuvers. 

Meanwhile, Ukrainian forces continue to target strategic Russian installations on the southern front. On March 1, the Russian defense ministry claimed it had downed more than ten Ukrainian unmanned aerial vehicles (UAVs) in an attack against occupied Crimea. This comes as unverified reports suggested a Ukrainian UJ-22 drone was also downed on February 28 between Moscow and Ryazan. Ukrainian presidential advisor Mykhailo Podolyak denied the accusation and said Ukraine is not launching attacks on Russian soil; he claimed the increased aerial strikes on infrastructure were the result of “internal attacks.” Open-source evidence suggests explosions near Yalta and Bakhchysarai, Crimea, could have resulted from other projectiles, not exclusively drone strikes.

—Valentin Châtelet, Research Associate, Security, Brussels, Belgium 

Russian army continues to pressure Ukraine in Bakhmut

Russian forces continue their efforts to encircle and capture the eastern Ukrainian city of Bakhmut. Interviewed by Reuters on February 28, the commander of Ukraine’s ground forces described the situation as “extremely tense.” Russian troops, including Wagner units, are attempting to cut Ukraine’s supply lines to the city in a bid to force troops to surrender or withdraw. 

On February 28, pro-Russia sources shared a video showing Russian Su-25 fighter jets deployed over Bakhmut. The lack of adequate air support has been among the primary sources of friction between the Russian General Staff and the units fighting in Bakhmut. Footage from Ukraine’s 93rd Separate Mechanized Brigade shows fighting escalating, but Ukrainian forces appeared to be holding off the advance at the time of writing. On February 27 and 28, Ukrainian soldiers repelled more than sixty attacks, including on the villages of Yahidne and Berkhivka, north of Bakhmut. According to a pro-Russia blogger’s Telegram channel, Wagner units are advancing north of Bakhmut, but Ukraine’s army has not retreated. Amid heavy fighting, Wagner reportedly advanced on February 27 towards the AZOM metallurgical plant in north Bakhmut. 

Rybar, a Russian Telegram channel believed to be linked to the defense ministry, claimed on March 2 that Wagner’s troops had reached the western suburbs of Bakhmut and clashed with Ukrainian forces in the hills north of the area. According to Rybar, Russian troops approached the road between Chasiv Yar and Bakhmut. On March 2, The Insider reported that Bakhmut was under operative siege as Ukraine’s army repelled attacks in Orikhovo, Vasylivka, Dubovo, Khromove, and Ivanivske. 

Meanwhile, NATO Secretary-General Jens Stoltenberg told a Helsinki summit on February 28 that the end of the war in Ukraine “would not lead to normalization” of relations with Russia.

—Ruslan Trad, Resident Fellow for Security Research, Sofia, Bulgaria

Volunteer Russian unit fighting for Ukraine reportedly infiltrates Bryansk

Russian government figures, Kremlin media, and pro-Russia Telegram channels are heavily focused on an alleged March 2 incursion by pro-Ukraine forces in the Russian village of Sushany, Bryansk oblast, approximately one kilometer away from Ukraine’s north-central border with Russia. DW News and Radio Free Europe reported that members of the Russian RDK volunteer corps crossed into Russia and were active in the Bryansk area at the time of publishing.

According to DW News, RDK is “a unit of volunteers from Russia who have been fighting on the side of Ukraine since August 2022.” Initially, Ukrainian authorities dismissed the claims of an insurgency in the Russian village as a Russian false-flag operation. However, a video published on the official RDK Telegram channel showed fighters holding the unit flag and indicating a Russian government building behind them. In the video, and later in follow-up interviews, members of the unit adamantly denied claims spread by Russia that they had attacked the civilian population. They stated that the infiltration into Russian territory was done to sabotage Russian military targets. Additional reporting confirmed that RDK leader Denis Nikitin appeared in the video.

Russian Telegram channels and media did not distinguish that the volunteer troops are of Russian origin; instead they reported that a group of “Ukrainian saboteurs” had infiltrated sovereign Russian territory. The governor of Bryansk announced on March 2 that “saboteurs” had attacked the civilian population, killed a man, and taken hostages. President Vladimir Putin described the incident as a “terrorist attack” and condemned the alleged unprovoked shelling of a civilian vehicle. The Kremlin said it was closely monitoring the situation and continued to label the alleged insurgents as “Ukrainian militants.” It also tasked the Federal Security Service with conducting counterterrorism operations in response to the situation in Bryansk. 

Russia also suggested that the Center of the Psychological Operations of the Ukrainian Armed Forces (Центринформационно-психологических операций ВСУ) may have been responsible for the “attacks on civilians and infrastructure” in Bryansk, again making no distinction between the RDK and the official Ukrainian military. Echoing the Kremlin’s “terrorism” claim, far-right nationalist State Duma member Aleksey Zhuravlyov labeled the Ukrainian military and political leadership as “terrorists” in official public statements and called for an escalation of the “special military operation” into open war. 

As the conflict along the eastern flank intensifies, escalatory narratives involving northern regions of Ukraine could serve as a critical Kremlin tool for conducting operations into the northern border, where Russian forces could tap into already stationed and mobilized Belarusian troops, military bases, and equipment, along with their own units left behind following joint military training exercises between Russia and Belarus. 

—Kateryna Halstead, Research Assistant, Bologna, Italy 

Kremlin-linked Telegram networks coordinated to spread disinformation around the world

The DFRLab recently discovered fifty-six pro-Kremlin Telegram channels that targeted twenty countries with pro-Kremlin disinformation. Three networks of similarly named accounts — Surf Noise, Info Defense, and Node of Time — targeted users worldwide, including in Europe, Asia, South America, and the Middle East. The operation primarily relied on volunteer work. It focused on translating and spreading pro-Russia disinformation, as well as amplifying reports from Kremlin media outlets, state organizations, and state actors. 

The DFRLab found clear coordination between the three networks, but the approach to capturing a global audience was unsophisticated. The DFRLab consulted its global team of researchers to examine the accuracy of translations and found that the quality of translations was poor.

—Nika Aleksejeva, Research Fellow, Riga, Latvia 

—Sayyara Mammadova, Research Assistant, Warsaw, Poland 

Report examines Russia’s decentralized approach to internet censorship

Russian digital rights organization Roskomsvaboda collaborated with the Open Observatory of Network Interference (OONI) to publish a report examining “a year of military censorship in Russia.” The report reviews censored topics, websites, and services, as well as the legislative mechanisms used to enforce the censorship. 

According to the report, Russia blocked 494 domains over the course of 2022. These fell into twenty-eight categories, with news media representing the largest category, followed by social networks, human rights organizations, and circumvention tools. 

The report found that “more than 247,492 URLs were added to Roskomnadzor’s registry of banned websites” in the past year. However, the orders to ban content did not only come from Russia’s internet regulator. Other Russian agencies that requested websites be blocked include the federal tax service, Russian courts, and the prosecutor general’s office, among others. The report’s authors found over 3,500 instances of an entity anonymously requesting a website block. 

While blocking requests are centralized through Roskomnadzor’s registry, the implementation of internet censorship in Russia is decentralized, the report concluded. The authors found forty-eight of the 494 blocked domains were absent in Roskomnadzor’s registry. The report suggested that some internet providers in Russia can block content not listed in Roskomnadzor’s registry. 

—Eto Buziashvili, Research Associate, Tbilisi, Georgia

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Taken together, their comments signal a broader recognition from the Biden administration of the power of local officials to help achieve national goals. But as Biden works to boost North American economic competitiveness vis à vis China, US governors and mayors are being left out of the conversation. They’re not the only ones: Local leaders across North America, from Mexico to Canada, are being left out of discussions geared toward improving the continent’s economic integration. Biden should tap into the economic and political power of local leaders, and he should start by including them in diplomatic summits such as the North American Leaders Summit (NALS).

Local leaders drive day-to-day collaboration throughout North America, yet they weren’t invited to the NALS last month. So while Biden, Mexican President Andrés Manuel López Obrador (known as AMLO), and Canadian Prime Minister Justin Trudeau met to “promote a common vision for North America,” that vision will be unachievable without the local officials who have built a regional web of economic integration capable of weathering national partisan shifts. Biden, AMLO, and Trudeau should embrace this web by encouraging local and national leaders to establish multi-level ties between their governments and to deepen subnational bonds across borders.

A web of economic integration

The North American countries have a crucial, yet also tense, relationship: That was evident at NALS, which took place amidst Washington and Ottawa’s ongoing disputes with Mexico City’s energy policies. The summit itself reflects this inconsistency in the North American relationship, as last month’s convening was the first in five years and was pushed back several times. The US-Mexico relationship has been complicated by national politics, including when former US President Donald Trump called for a border wall and when AMLO boycotted the US-hosted Summit of the Americas in 2022. The US-Canada relationship also experienced friction during the nineteen-month COVID-19 border closure, the longest border restriction the countries have shared in history.

But US mayors and governors routinely build a foundation of cooperation with their cross-border counterparts focused on practical priorities such as employment and economic growth. Mexico and Canada are the United States’ top trading partners, and the economic interlinkages are most obvious in border states. In 2021, Mexican foreign-owned enterprises in California provided nearly ten thousand jobs, while seven in every ten dollars invested in Baja California, Mexico, come from the United States. The same year, Mexican companies investing in Texas generated 5,364 jobs while Texan companies investing in Mexico created 9,110 jobs. The economic impacts are particularly clear in smaller states such as Vermont, where Canadian-owned businesses employed nearly three thousand people in 2021 and Canadian tourists have contributed two hundred million dollars annually to the state’s economy.

Such collaboration is bipartisan. In April 2021, North Dakota Governor Doug Burgum, a Republican, created the Essential Worker Cross-Border Vaccination Initiative with the Manitoba premier to vaccinate essential workers transporting goods and services across the border, ensuring that commercial flows between their communities remain ongoing. In April 2022, Texas Governor Greg Abbott, a Republican, signed memoranda of understanding with the governors of Mexico’s four border states to enhance border security and mitigate slowdowns in commercial border traffic. And in October 2022, California Governor Gavin Newsom, a Democrat, announced an agreement between Californian and Mexican border communities to support the construction of the Otay Mesa East Port of Entry at the San Diego-Tijuana border, which is being built as part of an effort to boost economic cooperation and trade.

Locally driven economic relationships pave the way for economic integration on a national level. Javier Martínez, founder and president of the Association of Mexican Entrepreneurs Los Angeles, told us that investment between California and Mexico drives the “incorporation of small and medium firms [into] the supply chains of the global firms,” strengthening national economic collaboration and opening opportunities for practices such as nearshoring. Local leaders are much more than implementers of national economic policies—they’re incentivized by the potential economic benefits to shape trade relationships from the bottom up. This was evident in 2017 and again in 2019, when Mexican and US mayors came together to support a modernized North America Free Trade Agreement and later urge the passage of the US-Mexico-Canada Agreement (USMCA). In 2022, US and Canadian mayors prepared a joint letter calling on their national governments to repeal the remaining COVID-19 border restrictions and hasten the return to pre-pandemic cross-border exchanges.

The collaboration spearheaded by local leaders is resilient to national partisan shifts. The aforementioned diplomatic disputes between the United States, Mexico, and Canada can impede cooperation and stall advancements in the North American relationship—yet these national-level tensions typically don’t stop cities and towns from promoting trade and tourism with their northern and southern neighbors. Initiatives by Biden, AMLO, and Trudeau to strengthen North American competitiveness may not outlast the national leaders’ terms if they don’t actively engage with the local leaders who have built the region’s economic integration and have a vested interest in its future.

A missed opportunity at NALS

At NALS, national leaders laid out their plans to mount a combined defense against China’s rising economic dominance by overhauling North American industrial capacity and integration. The gathered leaders announced steps to boost their roles in critical-mineral supply chains, which are currently dominated by China. They also pledged to organize the “first-ever trilateral semiconductor forum” as the next move in an escalating contest with China over control of the industry.

These policies aim to reverse a decline in US-based manufacturing that has led to a $382.9 billion US goods trade deficit with China and the US manufacturing workforce declining by more than a third. Because these local leaders have their communities in mind, they’re accustomed to reframing national-security objectives (such as semiconductor manufacturing) as priorities for their districts and constituents. Yet the roster for the trilateral semiconductor forum scheduled for early 2023 only includes “senior industry representatives” and “cabinet level participation” from the three countries. There is no mention of a role for mayors and governors who will play an essential role in forging the requisite economic and diplomatic cooperation from the bottom up.

How to implement this cooperation

North American national leaders should affirm local leaders’ role as trailblazers in their mission of advancing a closer economic alliance. They can do that by making space for local officials at the next NALS, whenever it takes place. The White House should work with US State Department’s Special Representative for Subnational Diplomacy Nina Hachigian to design parallel sessions at NALS that convene local leaders who represent communities that are part of critical-mineral and semiconductor supply chains to compare strategies and report out to national leaders. These sessions should focus on creating city- and state-specific NALS deliverables on economic cooperation and trade that resonate with communities in all three countries.

In contrast to the most recent NALS, mayors from across the Western Hemisphere will convene at this year’s inaugural Cities Summit of the Americas; it’s equally important to bring national leaders to spaces in which local leaders are gathering to ensure that neither perspective is siloed. The US State Department, White House, 24 Sussex, and the Palacio Nacional should ensure that cabinet-level officials and above are also represented at the Cities Summit so that they can get up to speed on their local leaders’ priorities and ideas.

In between the various summits, national leaders should support and expand bilateral initiatives led by cities and states. Many border communities have taken it upon themselves to set up economic commissions: For example, the Los Angeles Mayor’s Office, Mexico’s Foreign Ministry, and the Mexican Council of International Affairs launched the MEXLA commission to deepen ties including trade and energy collaboration. The Arizona-Mexico Commission created an economic development committee to strengthen development efforts, and the Texas Association of Business launched a Mexico Trade and Investment Policy Council to help companies navigate the Texas-Mexico business relationship. On the northern border, Michigan’s Economic Development Corporation established an international trade program that leads business delegations to Canada. Meanwhile, the Buffalo Niagara Partnership signed an agreement with two Ontario Chambers of Commerce to help local businesses take advantage of the cross-border economy and trade. Yet the landscape of bilateral cooperation across North America is made up of these sporadic examples that lack consistency and coordination. Hachigian should take stock of existing subnational initiatives to glean effective strategies and assess where more support is needed.  

To strengthen existing initiatives led by local leaders, Hachigian’s Unit for Subnational Diplomacy should assemble the knowledge of local leaders who have been fostering bilateral economic partnerships into a toolkit for all US states to use in building cross-border partnerships. Hachigian’s office can then work to disseminate these toolkits and trainings through existing subnational bodies, such as the National Governors Association and US Conference of Mayors.

The Unit for Subnational Diplomacy should also work with universities, research institutions, and local chambers of commerce to conduct a widespread review of state and city-level economic cooperation with Mexico and Canada to identify the benefits of advancing economic cooperation. This uncovered data can be shared with constituents to substantiate the value of maintaining international commissions, incentivize additional mayors and governors to deepen North American trade relationships, and plainly reveal the impact of local efforts to national leaders.

These steps will equip mayors and governors from all fifty states with the tools to champion economic integration initiatives, further strengthening their role as important advisors to national leaders and crucial players in future policy discussions.

North American local leaders are already getting the job done on the ground; they have earned a seat at the diplomatic table.

Willow Fortunoff is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

Mary Ann Walker is a member of the Atlantic Council’s Adrienne Arsht Latin America Center Advisory Council.

The post Mayors and governors will drive the future of North American economic integration appeared first on Atlantic Council.

Atlantic Council research shows that a mere 10-minute reduction in wait times at the US-Mexico border can have increasingly positive effects on communities and economies on both sides of the border. The Adrienne Arsht Latin America Center, in collaboration with the Hunt Institute for Global Competitiveness and Colegio de la Frontera Norte, analyzed three major potential economic impacts of this reduction. The first, “The economic impact of a more efficient US-Mexico border: How reducing wait times at land ports of entry would promote commerce, resilience, and job creation,” looks at the impact of a 10-minute reduction for Mexico and the United States on a national level. The second, “The transformative power of reduced wait times at the US-Mexico border: Economic benefits for border states,” looks at the economic impact for the United States’ four and Mexico’s six border states. The third, and final report “US-Mexico commerce: Tracking the final destination and Mexico’s fiscal benefit with Greater Border Efficiency,” tracks the final destination and economic impact of commerce entering the United States via three key ports of entry. 

This interactive map summarizes the three reports’ findings. It separates the data into US national benefits, US border benefits, Mexico national benefits, and Mexico border benefits. The red dots analyze three specific ports of entry — San Diego, California; El Paso, Texas; and Laredo, Texas — tracking where cargo passing through each ends up in the United States.

Click along the map to find out more about the economic impact of a 10-minute reduction in wait times at the US-Mexico border. 

In-depth research and reports

Report Feb 17, 2023

The transformative power of reduced wait times at the US-Mexico border: Economic benefits for border states

By Alejandro Brugués Rodríguez, Noé Arón Fuentes Flores, David Gaytan, John Gibson, Mayra Maldonado, Jason Marczak, Jorge Eduardo Mendoza Cota, José Ángel Moreno, Roberto Ransom, and Ignacia Ulloa-Peters

Atlantic Council’s new data shows that a mere 10-minute reduction in wait times – without any additional action – can create thousands of Mexican jobs, grow the gross domestic product (GDP) of several Mexican states, and generate hundreds of thousands of dollars in new spending in the United States.

Economy & Business Inclusive Growth

Report Sep 27, 2022

The economic impact of a more efficient US-Mexico border: How reducing wait times at land ports of entry would promote commerce, resilience, and job creation

By Alejandro Brugués Rodríguez, John Byrd, Noé Arón Fuentes Flores, David Gaytan, John Gibson, Camila Hernández, Mayra Maldonado, Jason Marczak, Jorge Eduardo Mendoza Cota, Roberto Ransom, and Ignacia Ulloa

Improvements in border management and the adoption of new technologies at the US-Mexico border have the potential to enhance border security and generate economic benefits for the United States and Mexico through expedited flows of goods and people.

Economy & Business Latin America

Issue Brief Feb 27, 2023

Beyond the US-Mexico border: Destination of final goods, environmental impact, and future scenarios for border relations

By Atlantic Council

Three complementary analyses on the value and final destination of northbound commercial trade flows; the environmental impact of idling vehicles at the US-Mexico border; and three potential scenarion for the future of US-Mexico relations.

Economy & Business Energy & Environment

The post Ten minutes at the border: Revving the US and Mexican economies appeared first on Atlantic Council.

A joint analysis by the Atlantic Council’s Adrienne Arsht Latin America Center, the University of Texas at El Paso’s Hunt Institute for Global Competitiveness, and El Colegio de la Frontera Norte.

US-Mexico commerce: Tracking the final destination and Mexico’s fiscal benefit with greater border efficiency

By Edgar David Gaytán Alfaro, John Gibson, Mayra Maldonado, Jason Marczak, Roberto Ransom, and Ignacia Ulloa-Peters

This report determines the value and final destination of northbound commercial trade flows. Based on limited data, it finds that 45 percent of trade entering the United States remains in border states (Arizona, California, New Mexico, or Texas), while 55 percent is distributed to other regions across the United States. It also evaluates the tax revenue collected by Mexico’s six border states (Baja California, Chihuahua, Coahuila, Nuevo León, Sonora, Tamaulipas) stemming from increased efficiencies at the border. Read our report to find out more about the top 5 receiving states, as well as the economic impact that different regions across the United States would experience following a 10-minute reduction in wait times.

Our border environment, water, and air pollution

By The Hunt Institute for Global Competitiveness, University of Texas at El Paso

This environmental impact analysis evaluates the impact idling vehicles have on water and air pollution across the US-Mexico border. Reduced wait times can significantly reduce particulates in the air and water, which currently pose a significant threat to the health of people living in border communities. To find out more about the potential reduction in pollution following decreased wait times, read our report or view our infographic.

Border 2033: Three scenarios for the United States and Mexico

By Peter Engelke, Deputy Director of Foresight, Scowcroft Strategy Initiative; and Nonresident Senior Fellow, Global Energy Center, Atlantic Council

Foresight scenarios help us tell stories about how the future might unfold and are intended to stir imaginative thinking. In this report, we portray three scenarios of a world that might exist ten years from now in 2023 based upon uncertainties in the United States and Mexico’s relationship today. More specifically, we hypothesize what the US-Mexico relationship would look like if 1) there is little to no change in the manners that the United States and Mexico engage, 2) fears over border security leads to an increasingly hardened border, and 3) Mexico and the United States increase collaboration on border issues. Find the full report below.

Report Sep 27, 2022

The economic impact of a more efficient US-Mexico border: How reducing wait times at land ports of entry would promote commerce, resilience, and job creation

By Alejandro Brugués Rodríguez, John Byrd, Noé Arón Fuentes Flores, David Gaytan, John Gibson, Camila Hernández, Mayra Maldonado, Jason Marczak, Jorge Eduardo Mendoza Cota, Roberto Ransom, and Ignacia Ulloa

Improvements in border management and the adoption of new technologies at the US-Mexico border have the potential to enhance border security and generate economic benefits for the United States and Mexico through expedited flows of goods and people.

Economy & Business Latin America

Report Feb 17, 2023

The transformative power of reduced wait times at the US-Mexico border: Economic benefits for border states

By Alejandro Brugués Rodríguez, Noé Arón Fuentes Flores, David Gaytan, John Gibson, Mayra Maldonado, Jason Marczak, Jorge Eduardo Mendoza Cota, José Ángel Moreno, Roberto Ransom, and Ignacia Ulloa-Peters

Atlantic Council’s new data shows that a mere 10-minute reduction in wait times – without any additional action – can create thousands of Mexican jobs, grow the gross domestic product (GDP) of several Mexican states, and generate hundreds of thousands of dollars in new spending in the United States.

Economy & Business Inclusive Growth

Made possible by

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Explore more

The post Beyond the US-Mexico border: Destination of final goods, environmental impact, and future scenarios for border relations appeared first on Atlantic Council.

On February 23, 2023, Global China Hub Nonresident Fellow Leland Lazarus’ article in The Diplomat explored the possibilities and pitfalls of Beijing’s increased engagement with Latin America, focusing on its growing ties with Argentina.

Fellow

Leland Lazarus

Nonresident Fellow

Global China Hub

Caribbean China

The post “China is Banking on Argentina’s Future Glory”: Nonresident Fellow Leland Lazarus in The Diplomat appeared first on Atlantic Council.

These actions are welcome, given the troubling environmental legacy of the prior administration. Deforestation rates surged under former President Jair Bolsonaro’s term, reaching the highest levels in 2021 since 2008. The Bolsonaro administration weakened environmental agencies intended to protect the Amazon rainforest, eased protections on protected land, and fired the head of Brazil’s National Institute for Space and Research (INPE) after it released data showing that deforestation rates had increased. Lax environmental policies resulted in land robbery and the increase of illegal activity, particularly related to logging and mining. Illegal mining saw a 46 percent increase in the Yanomami Indigenous territory in northern Brazil from 2020 to 2021, raising environmental justice concerns as the uniquely impacted Yanomami community experienced increased violence and diseases due to polluted rivers as a result of ore processing.

Lula’s return to office marks a return to the protection and conservation of the Amazon and its people while balancing the sustainable development of the region. The president created the country’s first Ministry of Indigenous Peoples, representing 307 indigenous groups. Lula also welcomed Marina Silva back to the federal government as Minister of Environment, the position she held during Lula’s first term as president. A well-known environmentalist from the Amazon state of Acre, Silva’s return to the Ministry signals Lula’s commitment to prioritizing environmental protection.

The return of the Amazon Fund

Deforestation of the Brazilian Amazon has made the forest a net carbon emitter since 2016, accelerated by Bolsonaro’s policies and the shuttering of the Amazon Fund. Soon after Lula’s victory, however, Brazil’s Supreme Court ruled to reactivate the fund, which he signed on his first day back in office.  With this reversal, Brazil is taking steps to once more be a clean energy and decarbonization leader in the region. But in order to reach these goals, expanding and diversifying funding is crucial.

Deforestation is a major factor in driving up greenhouse gas emissions, with tropical deforestation being responsible for roughly 20 percent of annual emissions. The Amazon rainforest holds 48 billion tons of carbon and its preservation is essential in the global fight against climate change and reaching ambitious net-zero goals. To assert low-carbon leadership in the region, Brazil should take advantage of the momentum behind the Amazon Fund right now.

The fund has historically been supported by Norway and Germany, but its support is set to grow. The Norwegian government—after backing out of the fund while Bolsonaro was in power—is keen on resuming donations immediately, and Germany signed a new pledge committing to donations following Lula’s October win. Additionally, following President Lula and Biden’s meeting this month, the two leaders released a joint statement in which Biden committed to work with the US Congress to contribute funds to conserve the Brazilian Amazon, including directly to the Amazon Fund. France, the European Union, and the United Kingdom have also announced their intentions to contribute to the fund.

While the addition of some of the world’s wealthiest countries are a significant step to broaden the fund’s scope, it is not enough. At COP27 in Glasgow, over one hundred world leaders representing more than 85 percent of the world’s forests pledged to halt deforestation by 2030, but little momentum has been seen since. As governments raise their ambition in forest preservation and funding, the focus must next turn to industry whose spending power and contributions in technology will be vital to expanding conservation efforts.

Private-sector participation in conservation funding would prove beneficial for Brazil, where although early satellite data shows deforestation in the Amazon has been declining since Lula’s return to office, experts say it may take years to show major progress following environmental setbacks under Bolsonaro. This progress will more effectively be accomplished with a suite of multi-sectoral funders. The fund’s potential for impact should be marketed to a broad coalition of funders from government, finance, and industry alike, with the option to contribute using verifiable carbon credits.

Building an even cleaner energy mix

Brazil’s environmental leadership need not be confined to the management of its ecosystems, however. Brazil already has one of the world’s highest shares of renewable energy in primary energy consumption, where clean energy sources meet 46 percent of total energy supply—not just electricity—in Brazil. By such a measure, Brazil is a clean energy powerhouse. Nonetheless, there are areas for Brazil to expand its low-carbon leadership.

Much of Brazil’s high share of clean energy in its energy supply is owed to biofuels, which are used in the industrial and residential heat, and transport sectors, at 50 percent and 25 percent, respectively. The country has been a pioneer in the use of biofuels for transportation, and in 2017 issued the RenovaBio policy which links the use of biofuels in transportation with Brazil’s Nationally Determined Contribution (NDC) under the Paris Agreement to reduce its emissions by 43 percent from 2005 levels by 2030. The country has committed under its NDC to increase the use of bioenergy, with high blending standards to support this. However, as an alternative to biofuels, Brazil could benefit from more targeted investment and policy support for electromobility, which does not pose the same concerns associated with the carbon intensity of land use. Brazil surpassed 100,000 cumulative electric vehicle sales in 2022, but deployment is limited by a lack of charging infrastructure. The country has less than 5,000 charging stations, while Germany, for instance, has over 1 million.  

Furthermore, the country has a genuine opportunity to increase the share of clean energy in the power grid above 86 percent. Much of this share is owed to hydropower, which accounts for about 65 percent of total generation. Brazil is being eyed as a prime destination for wind development, with a potential of 1.8 terawatts (TW) onshore and offshore. The Ministry of Mines and Energy has taken steps to clarify the regulatory and legal frameworks for offshore wind development, which are severely lacking across Latin America, and could be catalytic for investment beyond the 17 GW of offshore wind already planned in Brazil.

However, the integration of intermittent renewables onto the electric grid will require more power system balancing to ensure generation matches demand. This comes amid a troubling outlook for hydropower in Brazil, historically a reliable baseload energy source, but whose generation is forecast to be more variable, as climate change leads to abnormal weather patterns. Increasingly frequent droughts and less predictable rainfall may increase the need for energy storage or gas peaker plants, if necessary, to ensure the consistent delivery of electricity to consumers.

Another area for Brazil to lead is by modernizing Petrobras and orienting it towards the energy transition. Petrobras is the largest oil company in Latin America and Brazil’s flagship state-owned enterprise. Prior to Lula’s victory, core energy advisors expressed a desire to make Petrobras more active in investing in renewable energy assets. After his election, Lula appointed Jean Paul Prates to the role of CEO, a senator and political ally of Lula. Prates has a history of introducing sustainability-focused legislation, even during Bolsonaro’s term. This background could bode well for the management of Petrobras at a critical juncture. Debt-constrained Petrobras will need to find innovative models if it desires to pair energy-transition ambitions with returns for the Brazilian public, but if it succeeds, it could offer lessons for national or state-owned oil company modernization on a global scale.

Bolstering Brazil’s environmental and clean energy leadership will require careful planning in the years ahead. The re-emergence of Lula does not seal this fate.  While it can showcase its clean electricity sector, Brazil will need to balance using resources for conserving the Amazon and expanding electrification amid competing domestic economic and political priorities. For instance, Brazil will need to invest to maintain its social welfare state, amid a high benchmark interest rate of 13.75 percent and conflict between the Lula administration and the Central Bank of Brazil over fiscal policy, challenges which will impact the investment climate and Lula’s domestic political efficacy in tandem. Despite these challenges, Brazil has the potential to act as a first mover among emerging markets in making progress towards net-zero.

Lizi Bowen is associate director for digital communications and community engagement at the Atlantic Council Global Energy Center.

Maia Sparkman is an assistant director at the Atlantic Council Global Energy Center.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

Meet the authors

Staff

Lizi Bowen

Associate Director, Digital Communications and Community Engagement

Global Energy Center

Energy & Environment Media

Staff

Maia Sparkman

Assistant Director

Global Energy Center

Africa Climate Change & Climate Action

Staff

William Tobin

Assistant Director

Global Energy Center

Africa China

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​​​​​What you should know

• Nicaragua: On February 9, the Ortega-Murillo regime released and expelled 222 political leaders, priests, students, and other dissidents to the United States.
• US-Brazil relations: Presidents Biden and Lula da Silva met on February 10, during which they underscored the importance of strengthening democracy, promoting respect for human rights, and addressing the climate crisis.
• Ecuador: Ecuadorians rejected all eight items on a constitutional referendum backed by President Lasso, signaling anti-incumbent sentiments and the clout of pro-Correísmo opposition political forces.

Monitoring economic headwinds and tailwinds in the region

• Argentina: Annual inflation reached 98.8 percent, while activities in the construction and manufacturing sectors continued to decline.  
• Brazil: The government met with Mexico, Germany, Colombia, Chile, the World Bank, and the Inter-American Development Bank (IDB) to explore issuing green bonds this year. 
• Belize: The government launched two new projects in cooperation with Taiwan, a business support program focused on women and micro, small, medium-sized enterprises (MSMEs), and a flood warning system for disaster prevention.  
• Colombia: 2022 GDP growth is estimated to be 7.9 percent, down from 2021’s 10.8 percent growth. In 2023, growth is expected to further decline to 1.05 percent. 
• Peru: Continuing protests and supply shortages have led several mines to suspend or reduce operations, threatening copper production.  
• Suriname: President Santokhi expressed willingness to collaborate with neighboring Guyana on oil and gas exploration and development to position the Caribbean as an energy hub. 

In focus: Inflation and infighting

As regional inflation continues, political pressures are leading to criticism of central bank policy in Brazil and Colombia. Recently-elected presidents Lula and Petro have both questioned rate hikes as a method to tackle inflation, suggesting more flexible targets and alternative policies. The governor of Colombia’s Central Bank, Leonardo Villar, expects the region to require continuing tight monetary policy, which critics argue may complicate other policy goals such as growth. Roberto Campos Neto, president of the Central Bank of Brazil, has expressed his willingness to coordinate with the Lula administration to achieve growth and control inflation. 

Despite the public clashes, central bank policy in both countries remains independent. In Brazil, a 2021 law protects central bank autonomy and is unlikely to be repealed. In Colombia, the central bank has maintained a course independent of presidential advice for two decades. 

Health + Innovation

• Colombia: President Petro presented a health reform to Congress that seeks to improve primary care, expand access to treatment, raise healthcare worker salaries, and fight corruption by eliminating private sector management of payments.
• Brazil: Nearly three years since COVID-19 claimed the life of its first victim, the country has for the first time registered zero pandemic-related deaths in a day on February 12.
• Jamaica: The Bureau of Standards launched the Jamaican Standard Specification for Telemedicine, which provides the framework through which telemedicine may be safely practiced while upholding the integrity of the medical profession.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: February 18, 2023 appeared first on Atlantic Council.

A joint report by the Atlantic Council’s Adrienne Arsht Latin America Center, the University of Texas at El Paso’s Hunt Institute for Global Competitiveness, and El Colegio de la Frontera Norte.

Executive summary

The announcements and commitments made at the North American Leaders Summit in January 2023 reiterated the importance of North American competitiveness, inclusive growth and prosperity, and the fight against drugs and arms trafficking.¹ To achieve the goals and deliverables established during the summit, it is critical that the US-Mexico border be managed and perceived as an essential contributor to national, binational, and regional security and economic development.

A more efficient US-Mexico border has the potential to reduce border crossing times for commercial and noncommercial vehicles, generating positive externalities for the United States and Mexico including enhanced security and economic growth.² This report – the second in a two-part series – outlines the economic impact of reduced wait times at the border, focusing on the costs and benefits for border states in both countries.³

This report shows that a mere 10-minute reduction in wait times – without any additional action – can create thousands of Mexican jobs, grow the gross domestic product (GDP) of several Mexican states, and generate hundreds of thousands of dollars in new spending in the United States. Ten minutes is then hopefully the starting point for even shorter wait times and even greater economic gains and job creation.

More precisely, increasing border efficiency by 10 minutes can result in more than 3,000 additional jobs across Mexico’s six border states while increasing their combined GDP by 1.34 percent.⁴ Additionally, this reduction would allow for an additional $25.9 million worth of goods to enter the United States every month and lead to $547,000 in extra spending across the United States’ four border states.⁵ A forthcoming standalone short report will evaluate the final destination of traded goods and the economic benefits for states beyond the border.

In terms of Mexico’s border states, Tamaulipas would see the greatest growth in GDP (1.9 percent), followed by Baja California (1.6 percent) and Chihuahua (1.5 percent). Overall, this would generate a $2.2 billion increase in GDP and a $167 million increase in intermediate demand and a $3.2 million increase in labor income across Mexico’s six border states.

A 10-minute reduction in wait times would also lead to an average of 388 new loaded containers entering the United States from Mexico monthly. This translates to $25.9 million worth of cargo crossing through the United States’ four border states (Arizona, California, New Mexico, and Texas), a figure identified in the part-one of this study.⁶ New research shows that approximately 222 (57.2 percent) of these containers would enter via Texas ports of entry, carrying $17 million in cargo every month.

Separately, the 10-minute reduction in wait times would lead to 5,020 additional noncommercial monthly crossings, resulting in $547,000 in extra monthly spending by families and individuals traveling from Mexico to the four US-border states every month. The model estimates that these individuals would spend an additional $256,000 in California alone, representing nearly 50 percent of the total increase in spending. The clothing retail industry would experience the greatest gains across the board, with $132,000 in additional annual revenue from streamlined noncommercial crossings.

Results were informed by engaging local and regional stakeholders in roundtables, focus groups, and one-on-one interviews to identify areas for practical improvement in border management. These include investing in technologies, infrastructure, management, staffing, and supply chains. For instance, deploying high-tech screening technologies further away from ports of entry would facilitate a greater and faster flow of cargo and passenger information. Similarly, a collaboration between the United States and Mexico to develop joint, decentralized tools for border management and processing could ensure a more efficient flow of legitimate cross-border traffic while detecting illegal activity. Improvements in infrastructure and an increase in personnel staffing ports of entry would prevent bottlenecks and decongest queues that regularly spill over onto interstate highways and local roads.

While this report outlines the potential economic impact of a more efficient US-Mexico border for the border region, it also identifies new spaces for growth and new questions to be asked, studied, and addressed. For example, a lack of data in non-border Mexican states makes it difficult to estimate what the impact of enhanced efficiency in non-border inspection points would be for overall binational commerce and within each individual state. Similarly, limited US data exists to determine the final beneficiaries of new economic activity. New, reliable data is essential to understand the greater implications of streamlined border processes and tools in the United States and Mexico.

Made possible by

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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Issue Brief Dec 15, 2022

Road to the tenth North American Leaders’ Summit: Spotlight on competitiveness and supply chains

By María Fernanda Bozmoski, Jacob Kaufhold, and Isabel Chiriboga

North American competitiveness and supply chains are at an inflection point. The three leaders must take the momentum of the last meeting and continue to advance key priorities. In an increasingly complicated global context, close collaboration and partnership on all fronts is key.

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The economic impact of a more efficient US-Mexico border: How reducing wait times at land ports of entry would promote commerce, resilience, and job creation

By Alejandro Brugués Rodríguez, John Byrd, Noé Arón Fuentes Flores, David Gaytan, John Gibson, Camila Hernández, Mayra Maldonado, Jason Marczak, Jorge Eduardo Mendoza Cota, Roberto Ransom, and Ignacia Ulloa

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The post The transformative power of reduced wait times at the US-Mexico border: Economic benefits for border states appeared first on Atlantic Council.

1. Lula pitches a global sustainability fund

Lula proposed the creation of a new global fund for sustainability, which would designate funds from developed nations to sustainable efforts across the world. There seems to be a willingness from the United States’ side to contribute to the existing Amazon Fund, joining Norway and Germany, on efforts to protect the Amazon rainforest.

Brazil is home to the largest portion of the Amazon and is an indispensable partner for the United States on climate and sustainability. As Biden prioritizes sustainable infrastructure and equitable clean energy domestically and more ambitious climate goals abroad, Brazil is an important ally in the hemisphere. Of Brazil’s available energy resources, around 80 percent are from renewables, and, as an agricultural powerhouse, it has the potential to be an even greater asset in solving the global food crisis. The US-Brazilian cooperation on climate and the environment is expected to deepen as the United States Special Envoy for Climate John Kerry plans to visit Brazil soon.

2. UN Security Council reforms are on the table

Lula has proposed to be a peace broker in Ukraine by pushing the rhetoric around the conflict to be about finding peace rather than continuing the war. He told reporters after the meeting that he and Biden discussed “the need to create a group of countries that are not involved directly or indirectly in the war with Russia in order to find a way to make peace.”

In this context, Lula also advocated for the need to reform the United Nations Security Council to become more representative of current geopolitical dynamics—a long-standing demand of the Brazilian president—to which Biden seemed to agree, Lula said.

3. Lula embraces progressive stardom

Lula met with prominent progressives on Friday morning before heading to the White House. With Senator Bernie Sanders (I-VT), Lula discussed ways to increase international cooperation to protect the Amazon rainforest and preserve the environment for future generations. The Brazilian president also met with Reps. Alexandria Ocasio-Cortez (D-NY), Pramila Jayapal (D-WA), and Ro Khanna (D-CA). They discussed shared commitments to environmental, social, and economic justice—and US-Brazil cooperation to fight authoritarianism and strengthen relations between the two countries’ legislators. The meetings represent an important effort to extend cooperation beyond the executive level, but in order to be effective and long-lasting, this kind of outreach must be bipartisan.

4. The presidents have a small window for cooperation

Lula’s Washington visit opens a new chapter as he seeks to position Brazil as a critical player regionally and internationally. Next month, he will travel to China, and he is also planning a trip to Angola, Mozambique, and South Africa.

But both Lula and Biden face challenges at home, as expectations rise for Lula to deliver on key campaign promises and Biden prepares for the 2024 elections. The window of opportunity for furthering cooperation is slim, but the stage is set for both countries to capitalize on new momentum. Particularly on the environment, Friday’s visit was a promising start.

Caroline Arkalji is a Young Global Professional with the Atlantic Council’s Adrienne Arsht Latin America Center.

The post What came out of the Lula-Biden meeting? appeared first on Atlantic Council.

“It’s a good incentive… to invest in all these green infrastructures,” Pouyanné said at an Atlantic Council Front Page event on Thursday.

Pouyanné agreed with many Europeans that the IRA is protectionist and undermines the transatlantic relationship, saying that this is part of a “trend” in which the United States, by creating its own rules, seems to be believing less and less in the multilateral trading system built on World Trade Organization agreements. But he also said that the law is a “clear political decision by the United States” made because “they want that green industries will take place on their territory.” For example, he noted, nearly 90 percent of solar panels are manufactured in China, creating “another problem of dependency” for both Europe and the United States in the future.

According to Pouyanné, the United States took advantage of an “opportunity” in the energy transition by passing the IRA, so “let’s do the same in Europe.” To avoid a future in which Europe relies heavily on imports, he said, the continent “must take decisions” to guarantee “that green industries [will] be located in Europe.”

Below are more highlights from the event, moderated by Atlantic Council President and CEO Frederick Kempe, where Pouyanné discussed the role of oil and gas in the energy transition and the energy impacts of Russia’s war in Ukraine.

“No way to escape” natural gas

• Pouyanné said that because this year’s United Nations Climate Change Conference of the Parties (COP28) in the United Arab Emirates is being hosted by a major oil-producing country, “it raises the bar for the whole oil and gas industry… [We have] to engage, as a lot of stakeholders are expecting us to do.”
• At COP26 in Glasgow, US President Joe Biden released a plan to tackle methane emissions from the oil and gas industry; Pouyanné said that TotalEnergies can lower methane emissions by 80 percent by 2030, while keeping an eye on lowering all other emissions from the production process. “If I can produce oil and gas with no emissions, I’ve done my job in production” to cut emissions, he argued.
• “Natural gas is a fundamental energy for the transition” because it emits half the methane that coal does, Pouyanné explained. Natural gas, he added, will also help provide a consistent source of energy to fill the gaps of intermittent wind and solar power while new infrastructure to support energy storage and transmission is brought up to scale.
• This year, with Russia’s war in Ukraine raising questions about the global energy supply, Pouyanné said that the world discovered how important energy reliability, affordability, and sustainability are—and how much reliability depends on gas. “On one side, the Biden administration [said] one year ago, ‘you need to diminish your emissions,’ and then we hear ‘you need to drill more.’” That, Pouyanné said, shows how the world will “need gas for very long.”

The global divide

• While TotalEnergies had invested fifteen billion dollars in Russia, it has begun withdrawing from its Russian investments. “We have impaired almost all of our Russian assets,” Pouyanné explained. “We have step-by-step progressively retracted from almost all of our business in Russia.”
• As Russia’s war in Ukraine continues, Pouyanné warned, the West must “be careful” to avoid believing that the rest of the world sees the conflict as a fight between democracy and autocracy. “It’s not the dominant [narrative] today in the Middle East, in Asia, [or] in Africa,” he said, explaining that leaders in the Global South are more focused on developing their economies than the war. He recalled how there have been mixed responses from countries to imposing sanctions on Russia and to voting on condemning Russia in the United Nations.
• Pouyanné noted that he sees a similar division between the West and the rest in the climate debate with each passing COP. “It should not be” so divided, he said, “Let’s avoid antagonism. Let’s keep humility. Let’s listen to these [Global South] leaders.”

Investing in renewables—and fossil fuels

• A day after TotalEnergies posted a record yearly net profit, Pouyanné talked about the French oil major’s plan to spend the increased profits. The company plans to invest sixteen to eighteen billion dollars of its capital, with around five billion going toward low-carbon energies and about twelve billion going toward hydrocarbons. “With twelve billion dollars,” Pouyanné explained, the “objective is to continue to maintain… stable production for this decade and continue to grow our liquefied natural gas business.”
• But, he noted, it will be “very important” to “continue to invest in oil and gas” to keep profits and investments high across the energy sector: “If I can invest five billion dollars in low-carbon energy in 2023, it is because I have made money from oil and gas,” he explained.
• Pouyanné said that the biggest investment opportunities lie in emerging economies such as Brazil, India, and African countries. TotalEnergies, he explained, has invested in new oil fields in Brazil and new projects, including a $3.5-billion pipeline, in Uganda.
• While people in the West “complain about the Chinese influence in Africa,” he said, that influence is growing because of China’s more long-term approach to investing in the continent—rather than exporting natural resources right away.
• The TotalEnergies head said the company will take some of the profits made in Uganda, Mozambique, and elsewhere to “invest in Africa.” That includes the electric grid. “When you don’t have electricity in the country, it is difficult to [improve] economic growth,” he said.
• Pouyanné explained that with technologies such as electric vehicles gaining in popularity, “the oil market at a certain point will begin to decline… this is why we invest in electricity, because this is a growing market.”

Katherine Walla is an associate director of editorial at the Atlantic Council.

Watch the full event

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While it is simplistic to compare the two, such public threats to democratic stability may have created a shared concern that could realign US and Brazilian foreign-policy objectives and ultimately the bilateral relationship. With Lula’s visit with US President Joe Biden at the White House on Friday coming just weeks before March’s Summit for Democracy, the leaders should talk through ways to address the common threats to democracy they face, such as cooperation and knowledge-sharing on legal and defense issues related to Brazil’s January 8 investigations. That conversation can also be a jumping off point for discussing other shared priorities including grappling with the changing geopolitical landscape, protecting the environment and addressing climate change, and increasing trade across the Americas.

The synergies are there, but the window of opportunity for Biden and Lula to capitalize on the moment is disappearing as ordinary citizens, amid rising polarization, are losing the sense that democracy is valuable. That makes the strength of the US and Brazilian democracies—collectively serving almost seven hundred million people—all the more important.

The geopolitical agenda

Lula’s reemergence onto the regional and global stage can turn Brazil into the United States’ preferred partner in the Western Hemisphere. Brazil could prove a valuable diplomatic and trade entry point to a region where Washington has faced challenges—and even downright hostility—in pursuing its interests. Lula, who has the support of both the emerging and older generations of left-wing leaders and touts a pragmatic approach to the economy and foreign relations, has the type of clout that can convene Latin American and Caribbean leaders for frank discussions on the future of the hemisphere. One of Lula’s top foreign-policy priorities will be to strengthen ties across Latin America and Caribbean. This could also present an opportunity for Brazil to play a mediating role with regard to the Venezuela crisis, for example.    

In addition, Brazil’s number one trading partner is China, with the United States a close second. Recently, US foreign-policy positions toward Latin America have prioritized outcompeting China in the region. But in that competition, the United States has been losing. It is important for the United States to present Latin American and Caribbean countries such as Brazil with alternatives to some of China’s key investments, particularly in renewables and technology.

Lula is positioning Brazil as a potential diplomatic force in proposing peace negotiations on the Russia-Ukraine war. Bringing to mind the negotiating role that Brazil played in the Iran nuclear deal, Lula proposed a club of non-aligned nations to find peace through diplomatic means, although that is not a very popular option in Western capitals. Lula could be an important ally in eventual conversations about Russia’s war in Ukraine, especially because Brazil will take the Group of Twenty (G20) presidency in 2024.

Progress on the environment

Beyond the geopolitical sphere, Biden and Lula should discuss how they can work together to protect the environment and address the effects of climate change. In one of the Biden administration’s first moves, the president issued the Executive Order on Tackling the Climate Crisis at Home and Abroad. But doing so abroad requires partners, and in Lula, Biden may have found one. These two leaders should work together immediately and with urgency, as the Western Hemisphere is significantly affected by the climate crisis: Latin America and the Caribbean is the region second-most prone to natural disasters (behind the Asia-Pacific), and the United States is a frequent target of intense hurricanes that result from warming waters.

The fact that Lula is bringing Minister of Environment Marina Silva with him to Washington is a sign of how much he is prioritizing the issue. There is great expectation that under Lula, Brazil can push forward efforts to address the climate crisis, particularly because the country houses the “lungs of the Earth”—the Amazon, which is one of the most biodiverse zones on the planet. Protecting the forest while also sustainably developing the region is a key element in capping and potentially reducing carbon emissions while also furthering the country’s—and the region’s—economic prosperity. The United States could take a big step forward by contributing to the Amazon Fund, which Norway and Germany already do.

The first leader-to-leader meeting between Biden and Lula is full of symbolism. It shows the resumption of stronger US-Brazil relations, a willingness to leverage opportunities for cooperation on the environment, and the United States’ recognition of Brazil as a more strategic partner—and a more significant actor in the region and the world. And, following the January 8 events, the meeting shows that the United States and Brazil are a united pro-democracy front invested in strengthening their democratic institutions and promoting democratic values globally.

Valentina Sader is an associate director and the Brazil lead at the Atlantic Council’s Adrienne Arsht Latin America Center.

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​​​​​What you should know

• PAHO: Dr. Jarbas Barbosa took office on February 1 as the health organization’s new director, pledging to work in partnership with member states to end the pandemic and ensure that the region’s health systems recover stronger than before.
• IMF: The organization raised its global growth forecast to 2.9 percent, up from its original 2.7 percent. The outlook is also better for the region’s two major economies: up 0.2 percent for Brazil, to 1.2 percent, and a half point for Mexico, to 1.7 percent.
• Migration: The 250,000 migrants that irregularly crossed into Panama through the Darien Gap in 2022 represents a record high that is nearly double the 133,000 entries recorded in 2021.

Monitoring economic headwinds and tailwinds in the region

• Mexico: The national statistics agency reported that the economy grew 0.4 percent in Q4 of 2022 compared to the previous quarter.
• Argentina: The government will leverage new gas exports to Chile, and potentially Brazil, to improve its trade balance and pay down debt.  
• Brazil: Alongside Argentina, the government is floating the development of a common currency linking the two countries to facilitate trade. 
• Colombia: The Minister of Mines and Energy Irene Velez announced at Davos that the country will no longer approve new oil and gas exploration contracts.
• Jamaica: Third-quarter GDP grew by 5.9 percent over 2022 due to a resurgent tourism sector, which has boosted hotels, restaurants, and services, among other sectors.  
• Peru: Ongoing protests and road blockades have cost the country $550 million since the ousting of President Pedro Castillo last December. 
• Transatlantic ties: German Chancellor Olaf Scholz visited Argentina, Brazil, and Chile, to discuss the EU-Mercosur trade agreement and support for Ukraine. 

In focus: Energy expansion in Trinidad and Tobago

On January 24, the United States licensed Trinidad and Tobago to develop a natural gas project off the coast of Venezuela in the Dragon field region. The project will support overall Caribbean energy security, with a requirement that some of the produced gas must be exported to Jamaica and the Dominican Republic. To comply with US sanctions, Trinidad will pay for the gas with humanitarian aid. 

Atlantic Council experts reacted immediately, emphasizing the importance of this move towards meeting Caribbean energy demand. You can read more here. 

Health + Innovation

• Haiti: As of January 17, the Ministry of Public Health and Population has reported over 24,400 suspected cholera cases.
• Education: A World Bank study shows that by 2045, nearly 5 million people across LAC would fall into poverty due to pandemic-induced learning losses.
• Brazil: The Health Ministry announced that it will roll out bivalent COVID-19 booster shots as early as February 27.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

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Fellow

Inigo Guevara Moyano

Nonresident Senior Fellow

Scowcroft Center for Strategy and Security Transatlantic Security Initiative

Americas Arms Control

This article was originally published in Spanish by El Heraldo de Mexico.

Last week, Germany and the United States took the decision to authorize the export of Leopard 2 and M1 Abrams main battle tanks to Ukraine, thereby changing the profile of Western military assistance.

This is significant since both countries have very restrictive policies for the export of military equipment since they impose on their clients the condition of requiring their authorization to re-export the material. That is, Germany must approve the shipment of Polish or Canadian Leopard tanks to Ukraine, even after they have been sold to these countries. The reasons range from ethical to political, economic, and technological, as they seek to prevent their clients from reselling material, they consider to be a kind of intellectual property to third parties.

Countries that buy weapons from Germany and the US must accept these conditions and do so largely because of the quality of the equipment, the after-sales service, and the reliability of their supply chains. There will be those who have had isolated bad experiences, but the data is clear, the United States is the largest arms exporter in the world, it controls 40 percent of the market, while Germany is in the top 10, controlling 5 percent.

The German authorization came after weeks of deliberation and was tied to the US agreeing to deliver the M1 Abrams. The amounts do not seem significant (Germany will donate 14 and the United States 31) but pledges from many other countries have been added to this authorization, at such a rate that Ukraine expects to receive 321 good quality tanks in the coming months.

The quality of these tanks will give Ukraine a competitive advantage: the Leopard 2 is a 60-tonne beast, considered by many analysts to be the best tank in the world, while the M1 Abrams is so powerful that it uses jet fuel instead of diesel. This qualitative change will take months to take effect as Ukrainian troops must receive adequate training and there is a necessary industrialization process, so Ukraine needs to continue receiving military aid including Soviet or Russian-made equipment.

The head of the US Southern Command, General Laura Richardson, announced during an event hosted by the Atlantic Council last week that the US was encouraging countries in the region to donate or sell their Russian/Soviet-sourced military equipment to help Ukraine.

In Mexico, the Navy, Air Force and National Guard have some 40 Mi-17 helicopters, 30 BTR-60 amphibious armored vehicles, a couple of dozen Ural heavy trucks and Igla anti-aircraft missiles. They were all opportunity purchases between 1994 and 2011: the Berlin wall had just fallen, and ex-Soviet equipment was offered at very low prices in those years. Over the years they have proven their use, but many are out of service, and what is certain is that most of them will have to be decommissioned in a few years, as purchasing spare parts is going to be a nightmare in the international market.

The Mexican armed forces began processes to replace them with Western equipment several years ago, but these projects are frozen under this administration. The Mexican government has a great opportunity—both political and commercial—to get rid of the Russian equipment, offering it at market price, in exchange for credits to continue its modernization processes. In plain terms, transfer this equipment to the US in exchange for credit to buy new equipment. Otherwise, all that equipment will remain in disuse and convert to junk, instead of becoming an asset both for the finances of the people of Mexico, and for the defense of an outraged country.

The Transatlantic Security Initiative, in the Scowcroft Center for Strategy and Security, shapes and influences the debate on the greatest security challenges facing the North Atlantic Alliance and its key partners.

Explore more

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The non-partisan CATF comprises twenty-nine members, all of whom serve on a volunteer basis. The CATF is co-chaired by four distinguished former policymakers, independently chosen by the Atlantic Council: Maria Antonieta del Cid de Bonilla, former President of the Bank of Guatemala and former Minister of Finance of Guatemala; Johanna Hill, former Vice Minister of Economy of El Salvador and Founding Partner at Central America Trade Consulting Group; Marlon Tábora, former President of the Central Bank of Honduras and Chief of the Economic Cabinet and former Ambassador of Honduras to the United States; and Anne Patterson, former United States Ambassador to El Salvador and former Assistant Secretary of State for International Narcotics and Law Enforcement.

“The private sector, governments, civil society, and the international community need to seize on global geopolitical and geoeconomic trends to help northern Central America leapfrog to achieve inclusive, long-term economic prosperity,” said Jason Marczak, Senior Director of the Adrienne Arsht Latin America Center. “It is imperative to accelerate the confidence of businesses looking to relocate or expand in Central America, which, in turn, will bring both local and international benefits. Increased prosperity for all in the Western Hemisphere is within arm’s reach, but all must work together toward the same goal.”

Central America continues to face a lack of sustained and inclusive economic opportunities, in part due to an apprehension from the private sector to invest on the ground.  Complementing the Partnership for Central America with an added local focus on the necessary public policy changes to incentivize investment, AALAC strives to address this challenge by bridging sectors and helping build consensus on concerted action to foster inclusive economic prosperity in the region. Together with the CATF, and with the generous financial support of DTI, AALAC will outline country-specific and regionally sensitive roadmaps to help accelerate the confidence of business in each of the three countries’ rule of law, democracy, and institutions. 

“The role of private sector is key in Central America’s efforts to fight corruption through the strengthening of the rule of law and democracy.” said Hugh Doyle DT Institute CEO. “DT Institute is proud to be part of the Central America Task Force (CATF) with Atlantic Council. Together and with the other members of CATF, we will work to recommend locally-driven solutions and open new economic opportunities in Guatemala, Honduras, and El Salvador.”

The CATF will meet again on April 11, 2023 and will focus on opportunities in El Salvador; a corresponding brief will come out in early Summer 2023. For more information on CATF, contact Maria Fernanda Bozmoski, Task Force Lead and Deputy Director for Programs, at mbozmoski@atlanticcouncil.org.

About the Adrienne Arsht Latin America Center

The Atlantic Council’s nonpartisan Adrienne Arsht Latin America Center (AALAC) broadens understanding of regional transformations while demonstrating why Latin America and the Caribbean matter for the world. The center focuses on pressing political, economic, and social issues that will define the region’s trajectory, proposing constructive, results-oriented solutions to inform public sector, business, and multilateral action based on a shared vision for a more prosperous, inclusive, and sustainable future. The Center’s Central America programming has focused on providing insights, analysis, and galvanizing bipartisan support for sustainable solutions to the Northern Triangle’s economic, rule of law, and security challenges. Past marquee work includes our 2017 Northern Triangle Security and Economic Opportunity Task Force, our 2020 Central America Economic Reactivation in a COVID-19 World report, and our 2021 work with the Northern Triangle Advisory Group. Other select lines of the Center’s programming include: U.S. policy in the Western Hemisphere; Colombia’s future; Venezuela’s multidimensional crisis; US-Mexico ties; China in the Americas; Brazil’s trajectory; Caribbean development; regional economic development and commerce; and energy transitions.

For more information, visit www.atlanticcouncil.org, follow the Adrienne Arsht Latin America Center on Facebook and on Twitter @ACLatAm.

About DT Institute

DT Institute is a funder and implementer of peace and development projects. It focuses on co-creation and co-investment, as well as measurable impact and sustainability. DT Institute works with governments and our on-the-ground partners to address pressing issues—from conflict to economic crisis—and to establish a foundation for lasting stability, peace, and prosperity. It is in the organization’s DNA to be bold: DT Institute relentlessly innovates, creates, and measures its ability to drive innovation, strengthen communities, develop the next generation of leaders, and positively impact the lives of those we serve.”

Please email inquiries to aalac@atlanticcouncil.org

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Beyond Russia, Chevron recently made the first shipment of Venezuelan oil to Texas, while the White House is likely to announce an executive order on outbound investment screening after Secretary of State Antony Blinken’s visit to China in February. 

Russia’s draining budget

Western capitals imposed sanctions to run the Russian economy to the ground. But sanctions’ initial effects fell short of expectations. The ruble, rather than being reduced to rubble, reversed its initial depreciation and even became the best performing currency of 2022. It is misguided to use exchange rates as the main indicator of an economy’s health. However, the ruble’s good health tells us something about the relative value of Russia’s imports and exports, and the record-breaking balance of payments surpluses of Q2 and Q3 last year.

Even with high energy prices and additional income, Russia’s surging budget deficit shows that the invasion is causing Russia to spend much more than it is making in revenue. The Russian budget had a deficit of forty-seven billion dollars in 2022, one of the highest since the breakup of the Soviet Union. Although the Russian government conveniently decided not to publish data on the government spending this year, it is safe to assume that military spending contributed to the bulk of the increase in spending. 

Going into 2023, Russia’s budget deficit may be higher than Russia claims. Moscow anticipates its budget deficit in 2023 to be 2 percent of gross domestic product (GDP), based on the assumption that Russia’s flagship crude blend Urals is traded at seventy dollars a barrel. However, if the oil price cap lowers the Russian oil price to the maximum of sixty dollars while spending remains the same, the deficit would be closer to 4.5 percent, according to Financial Times estimates. 

To keep filling in the budget deficit and financing the war in Ukraine, Moscow will have to redirect funds from other domestic programs. In 2022, additional budget revenue came from Russia’s sovereign wealth fund, the one-time taxing of Gazprom, and issuance of largest-ever Federal Loan Obligations. However, in 2023, as the European Union (EU) works hard to diversify away from Russian gas, Gazprom is likely to have less revenue, therefore less tax revenue. Meanwhile, diverting sovereign wealth fund money toward the war takes away Russia’s rainy day fund and might result in slashing funding for schools and hospitals next year. 

Oil price caps: Working for now, likely to face challenges

The price cap on seaborne Russian crude oil came into effect on December 5, 2022. It stipulates that unless buyers can prove that they have paid below sixty dollars for Russian oil, they will be denied Western maritime services, such as insurance and brokerage. The Russian flagship crude blend Urals price has not reached sixty dollars since December. Even Russian government officials admit that freight costs for Russian oil have increased. 

Russia cannot afford to follow through on the promise of blocking sales to countries complying with the oil price cap, but it will attempt to undermine the cap. Since the policy came into effect, at least seven Russian oil tankers with Western insurance have left from Russia’s Baltic ports for Indian refineries. These tankers would not be able to insure their cargo if they were selling above sixty dollars. Some assert that the price cap will continue to work because sixty dollars is an acceptable price for Russia. However, we should not reach premature conclusions as Russia will be actively looking for options to sell above the capped price. One of the options in the short term is for Russia to self-insure and use Indian or Chinese vessels not subject to US or EU jurisdictions, and build up a fleet of crude vessels in the longer term. 

Despite even more daunting enforcement challenges, Group of Seven (G7) partners will expand the price cap to Russian refined petroleum products, such as diesel and kerosene on February 5. Sanctioning Russia’s fuel exports is likely to cause the rerouting of Russian diesel to India from the EU. But the EU still needs diesel supplies and it will be purchasing them from the United States and India. Thus, Russian diesel supplies may travel a lot more before finally reaching the EU again, creating inefficiencies in the market. However, the EU is prepared to take this step while it is simultaneously banning almost all imports of Russian oil products. 

New year, new deal: Resumption of Venezuela oil exports to the US

Since Russia’s invasion of Ukraine started in 2022, the United States and EU have been looking for alternative oil suppliers. This presented an opportunity to Venezuela—a heavily sanctioned country which happens to have the world’s largest oil reserves—to fill in the oil gap created by the sanctions against Russia. President Nicolas Maduro’s domestic political concession—resuming negotiations with the opposition party—has won him the issuance of General License 41 by the Treasury Department. The six-month license allows Chevron Corporation to resume natural resource extraction in Venezuela. In January, Chevron delivered its first oil shipment of half-million barrels of oil to the refineries in Texas. 

The resumption of Venezuelan oil shipments to the United States is a temporary alignment of interests for both parties. The United States is trying to fill in the vacuum created in the world energy markets by banning Russian oil. Meanwhile, as oil export finances two-thirds of Venezuela’s budget, Maduro is capitalizing on the opportunity of reviving Venezuela’s dilapidated oil industry and bringing in much-needed revenue for his government.

However, the United States is treading carefully, as it should. The license is only for six months, and sanctions can be reimposed at any time within that period should Maduro appear to violate human rights or end dialogue with the opposition.

China may become the testing ground for another US economic statecraft tool: outbound investment screening

In contrast with Venezuela, US-China relations have only been on the downhill since last year. In addition to the tech export controls we discussed in the previous edition, the United States has recently issued sanctions on over 150 Chinese illegal fishing ships. Notably, for the first time, the Treasury sanctioned a Chinese company listed on a US stock exchange, Pingtan Marine Enterprise. But that’s not all. 

The United States is considering screening outbound investment to China, to ensure that US companies aren’t transferring technology and know-how to Chinese military-civil fusion companies. In the United States, an executive order on outbound investment in China is likely to come out after Blinken’s visit to China in February, which is expected to be followed by legislative action later. The US Senate is actively engaging with experts to examine outbound investment screening. Explore our joint publication with the Center for a New American Security to find out how such a mechanism should be designed. 

Meanwhile, in the EU, Germany is pushing for the creation of an EU outbound investment screening mechanism. The European Commission already included this issue in the 2023 agenda. However, at first, screening would happen on a small scale so the EU authorities would have a chance to observe the consequences. With close collaboration among the EU member states and both sides of the Atlantic, outbound investment screening has the potential of limiting the technology transfer to Chinese military-civilian companies.

Global Sanctions Dashboard

The Global Sanctions Dashboard provides a global overview of various sanctions regimes and lists. Each month you will find an update on the most recent listings and delistings and insights into the motivations behind them.

Explore Here

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Learn more

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A welcome and necessary act of energy pragmatism

The Caribbean is suffering from the current energy crisis. Still dependent on heavy fuel oil and kerosene, high product prices translate to high electricity prices which undermine the competitiveness of Caribbean tourism and industry. One critical part of decarbonizing Caribbean energy and restoring energy security is enabling better access to natural gas, which helps provide cleaner electricity and cleaner fuels such as methanol and supports food security by producing ammonia for fertilizer. The Biden-Harris administration’s grant of a license to help Trinidad get access to Venezuelan gas, without a dime going to the Maduro regime, is a welcome and necessary act of energy pragmatism. Trinidad needs access to more gas as quickly as possible to produce liquefied natural gas (LNG) and clean fuels. Gas from new exploration could be seven to eight years in the future. The region needs a more secure supply of products now. And with Venezuela reviving the Petrocaribe agreement to again provide cheap loans for the sale of crude oil to its neighborhood, the United States needs to show it cares and can be relevant. Much more needs to be done to provide energy security to the Caribbean, but this license is a deft and critical first step.

—David Goldwyn is a nonresident senior fellow at the Atlantic Council’s Global Energy Center and co-chair of the Caribbean Energy Working Group at the Adrienne Arsht Latin America Center’s Caribbean Initiative. He is the president of Goldwyn Global Strategies, an international energy advisory consultancy.

A win for the Caribbean while continuing to isolate the Maduro regime

The US green light for Trinidad and Tobago (T&T) to begin development of a gas field in Venezuelan waters is a much-welcome step forward for Caribbean energy security. The Caribbean faces enormous short- and long-term energy challenges and needs this gas for its people and its economies. It has again become clear while I’ve been here in T&T this week that the country is well-positioned to process this gas for export to its neighbors and beyond. In an increasingly uncertain world, the stability of the United States’ Caribbean neighbors and a robust US partnership is increasingly critical for US security interests.

Importantly, the US license and the T&T authorities have stipulated that no cash payments will go to the Maduro administration as part of the Dragon gas field development. The Maduro administration must not financially benefit from any transaction while it continues to perpetuate its violations of human rights and its prohibition of personal liberties or of the free and fair democratic will of the Venezuelan people. This new US license is a win for the Caribbean while still keeping Maduro financially isolated.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

What the agreement means for negotiations between Maduro and the opposition

There is no doubt that the new agreement will enhance the Caribbean’s energy-security policy, both the policy itself and the speed of its implementation, given other geopolitical factors including the recent announcements by the Maduro government to revive the PetroCaribe program with former Venezuelan Ambassador to Colombia Félix Plasencia appointed to lead the revival. However, Venezuelan experts and political representatives have been cautious about this new sanction exception given that crucial details from the negotiation between Trinidad and Tobago and the Biden administration, as well as the negotiations with the Venezuelan government, are still unknown.

Venezuelans are wary in reaction to this news due to the local context and the developments of the negotiation process between the Maduro government and the opposition. The first humanitarian agreement signed between the two parties last November requires a complex process to be implemented. And the Maduro government has used this obstacle as an excuse to try to reconfigure the terrain for the future of the negotiations, which should move to a second phase—but without further sanction relaxation, this is unlikely to happen. Without sanctions relief, the Venezuelan government’s economic adjustment program will be shipwrecked, a result that is already being seen in the return of hyperinflation, innumerable salary protests, and the end of last year’s optimism. Today, the government seems to be aggressively armoring its position ahead of future negotiations by threatening to intervene in the National Electoral Council and proposing a new law to further restrict nongovernmental organizations.

Therefore, the agreement coincides with an unclear political climate, which may influence the public’s perception that the sanctions relief is geared toward US interests rather than a solution that can be contributed to negotiations in Venezuela.

—Colette Capriles is a member of the Adrienne Arsht Latin America Center’s Venezuela Working Group and a professor and researcher in philosophy, politics, and social sciences at Simón Bolívar University.

The US delivers a major win for the Caribbean

US commitment to Caribbean energy security took a significant leap forward on Tuesday. Granting Trinidad and Tobago a license to develop the Dragon gas field is momentous for the country, and it creates endless opportunities across the region. In the short term, perhaps over the next half-decade, a portion of the gas will be used to service the energy needs of Jamaica and the Dominican Republic. Over a longer period, given the considerable oil and gas reserves Guyana and Suriname hold, the Caribbean is poised to become a globally competitive hydrocarbon player, potentially anchoring Caribbean energy security and meeting demand across the world. The license also opens the door to other gas fields bordering Dragon that Trinidad and Tobago can exploit over the next decade, which would provide the country and the region more time to facilitate its energy transition.  

For the United States, the timing is important. Granting the license finally brings a tangible deliverable to Caribbean nations after a year of promises and discussions. With the Caribbean Community (CARICOM) inter-sessional meeting just around the corner—where all Caribbean leaders will convene—the US-Caribbean energy cooperation will be front and center of the Community’s agenda.  

—Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center.

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The United States has historically been the Caribbean’s preferred ally, mainly due to proximity. The movement of goods, people, and services to, from, and within the Caribbean often involves the United States. But despite the historical strength of the relationship, there remains a simmering frustration among Caribbean leaders about the United States’ empty and unfulfilled promises and an absence of consistent attention from US officials, which have kept the US-Caribbean relationship from truly deepening. The Caribbean has always seen the potential benefits of its relationship with the United States, but the same cannot be said the other way around.

Last year did see the United States making critical investments in its partnership with the Caribbean. In June, on the sidelines of the Summit of the Americas, US Vice President Kamala Harris announced the US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC 2030)—a new framework created to support climate and energy resilience in the Caribbean. The next day, US President Joe Biden met with Caribbean leaders, and the convening was praised by many across the region. And in a show of the region’s appetite to work with the United States, five Caribbean leaders met with Harris in September to discuss improving future cooperation; at the meeting, the United States announced new commitments to support the region’s energy, food, and financial security.

Last year the United States was in listening mode, and US statements and policies reflected as much. But 2023 promises to be the year in which the United States can finally satisfy some of the Caribbean’s needs and calm its frustrations. Today, there is confidence in the Caribbean that the United States understands the region’s challenges and priorities. Caribbean governments are looking for action, and it will be important that the United States delivers in what is expected to be a pivotal year for the relationship.

With the challenges the region faces, the Caribbean no longer has time to wait on the United States for action—and the United States can’t keep putting it off. Davis, speaking at the Atlantic Council on Tuesday, explained that if the United States fails to pay attention, “someone else will pay the attention.” For example, while China’s influence in the Caribbean has diminished, large projects and new concessional loans are beginning to pop up again, such as a $192 million concessional loan to Guyana to finance a road project and a new agreement with Suriname to expand city surveillance. At the same time, many Caribbean governments have broken from the zero-sum US-China competition narrative that pervades Washington and are building bridges with others including India, the African Union, and the United Arab Emirates.

Furthermore, any further delays mean that potential policy shifts may have a vanishingly short shelf life, as the 2024 presidential election approaches. US policy toward the Caribbean has seen more change than continuity, as each administration brings its own different approach.

What should the United States focus on in 2023?

The United States must understand that showing up is only half the battle. Calls from Caribbean leaders demanding that the United States pay more attention to the region after decades of neglect have translated into more US officials showing up at Caribbean-wide meetings and has resulted in more government and private-sector visits. This should continue but it should not be considered sufficient for the US-Caribbean relationship, which requires policy implementation. Continuing to show up with little to show for it will only create more frustration among Caribbean leaders in the medium to long term.

In 2023, the United States should focus on three key areas:

The United States should fulfill its PACC 2030 promises. PACC 2030 requires a full interagency effort, so the United States should ensure the Treasury, State Department, and vice president’s office are aligned on how to move forward with this massive undertaking. US officials should work with Congress on legislation that enshrines PACC 2030 for the long term. Lawmakers should also allocate funding to each of PACC 2030’s four pillars—development finance, clean-energy projects, local capacity-building, and deepening collaboration.

Second, the United States should let the Caribbean lead in areas for which it has in-house expertise and support the Caribbean’s positions in multilateral organizations. Most Caribbean countries are dependent on imports for energy and food, making the supply squeezes caused by Russia’s war in Ukraine particularly devastating for the region. While US help is needed, regional leaders are pushing forward on their own solutions. CARICOM’s plan to reduce the region’s food-import bill by 25 percent by 2025 is one such example. Here, the United States does not need a food-security policy for the region but instead should provide technical expertise and financing for Caribbean-led solutions.

US advocacy for Caribbean and small-state priorities in multilateral meetings that include other wealthy and powerful actors, such as the Group of Twenty (G20) and international financial institutions, can move the needle on solutions to these countries’ economic challenges. International support is needed in tackling the Caribbean’s struggles with debt relief, financial de-risking (the loss of correspondent banking relations with overseas banks), and poor access to concessional financing. For the United States, there are inherent benefits because slow Caribbean economic growth drives migration; plus, stronger economies can help preserve the strength of the region’s democracies.

Finally, the United States should address the region’s growing security concerns. Rightfully, climate, energy, and financial resilience have all featured prominently in the Biden administration’s Caribbean policies, but this has also meant that security challenges have lost prominence. Crime, violence, and gang activity have skyrocketed across the region over the past year. Trinidad and Tobago’s homicide rate in 2022 reached its highest level in more than a decade, and a rise in gang activity pushed Jamaica to institute a state of emergency. And per capita, Saint Lucia now ranks in the top 5 of highest homicide rates in the hemisphere.

This increase has been fueled in part by small-arms trafficking, with illicit small arms being imported into the Caribbean from the United States. Caribbean islands have limited security forces with numerous unmanned ports of entry, making the region a hotbed for small arms trafficking. Increased US-Caribbean security cooperation is needed. But first, US policies and projects—such as the Caribbean Basin Security Initiative (CBSI)—should be updated to reflect the region’s current security concerns. The CBSI barely touches on illicit small arms, for example; the United States should work this year with Congress and the Department of Defense to refocus its current security efforts.

After the progress of 2022, Caribbean leaders expect action instead of just more promises. The region knows that to survive climate change, rising food inflation, and its vulnerability to global economic shocks, it’ll need to leverage a US partnership that is backed by technical and financial resources. It adds up to a make-or-break year for US-Caribbean relations. As the United States begins to show attention to the Caribbean and regional leaders continue to welcome more US support, the timing has never been better to see real action. Without it, Caribbean nations could seek out more willing partners.

Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center.

The post <strong>This is a make-or-break year for US-Caribbean relations</strong> appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: The Supreme Court will investigate whether former President Jair Bolsonaro incited the January 8 attack on Congress and other government buildings in Brasilia.
• Peru: People—mainly from remote Andean regions—descended on the nation’s capital to protest against President Dina Boluarte in support of her predecessor and demand elections and structural change in the country.
• Trade: The value of goods exported from Latin America and the Caribbean (LAC) increased at an estimated rate of 18.8 percent in 2022, a downward trend from 27.8 percent in 2021, due to higher prices and low volumes.

Monitoring economic headwinds and tailwinds in the region

• Argentina: The government will buy back overseas bonds equivalent to over $1 billion to improve its debt profile, looking to send a positive signal to markets despite low reserves levels.
• Brazil: Vice President Alckmin said that Lula’s administration wants to remove a key tax on manufacturing and importing, the IPI, as part of a broader tax reform package. 
• Guyana: The government announced $43.4 billion in funding for a new natural gas power plant, alongside distribution infrastructure improvements, to promote business and development. 
• Multilaterals: During his inauguration, new Inter-American Development Bank (IDB) president Ilan Goldfajn announced three key priorities for the bank: social issues, climate change, and sustainable infrastructure. 
• Mexico: The 2023 North American Leaders Summit concluded with new agreements to promote sustainability, strengthen supply chains, and respond to migration. 
• Peru: The national statistics institute (INEI) said the economy expanded 1.7 percent year-on-year in November, marking a slight slowdown from the rise of 2.0 percent in October.

In focus: LAC in Davos

Latin American and Caribbean public- and private-sector leaders gathered alongside their counterparts from across the world in Davos, Switzerland, for this year’s Global Economic Forum. Colombia’s finance minister Jose Antonio Ocampo used the opportunity to push for a stronger agreement on minimum taxes for multinational companies. Brazil’s finance minister, Fernando Haddad, and environmental minister, Marina Silva, discussed Brazil’s positive economic outlook, environmental stewardship, and desire for regional integration. 

Spanish prime minister Pedro Sánchez also delivered a speech, in which he emphasized Spain’s role in building ties between Europe and Latin America, as Spain prepares to take over the Presidency of the Council of the European Union later this year. 

Health + Innovation

• Vaccines: The Canadian government will donate $33.4 million to the Pan American Health Organization (PAHO) to increase access to COVID-19 immunizations for populations across the region. This donation is in addition to a prior contribution of $40 million in 2021.
• Belize: The country will celebrate 34 years of relations with Taiwan through the construction of a new general hospital in San Pedro.
• Nutrition: A new United Nations report found that 22.5 percent—or 131.3 million people—of the region’s population cannot afford a healthy diet, citing a country’s income level, the incidence of poverty, and level of inequality as contributing factors.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 21, 2023 appeared first on Atlantic Council.

We don’t see them, but they’re out there. 

Rare, elusive, and well-camouflaged, snow leopards are exceptionally hard to spot. When sighted, these majestic cats seem to have come out of nowhere. And yet they were around us all along.  

In the discipline of global foresight, as the Atlantic Council’s Peter Engelke wrote last year, a “snow leopard” is “a known but underappreciated—perhaps even forgotten—phenomenon” that has the potential to change the world and shape its future even though appearances might suggest otherwise.  

The snow leopards discussed here are not predictions, but rather prompts for us to scrutinize overlooked phenomena. A technological breakthrough, for example, may not seem world-changing when still in development. Other phenomena might be so woven into our daily lives that they’ve become invisible to us, as with the recommendation algorithms highlighted below. The actors involved also influence how much weight we give to events and trends: If a head of state were to announce a country’s economic disengagement from China, we would sit up and pay attention, but companies deciding one by one to proceed with such “decoupling” may fly under the radar.  

Our next-generation foresight experts at the Scowcroft Center for Strategy and Security brought a fresh perspective to the task of spotting the hard-to-spot. Check out their list of six snow leopards to watch closely in the year ahead. 

Algorithms are everywhere yet almost invisible, serving as the silent sifters and sorters of our lives. Their influence is baked into everything from email and smartphones to GPS and government services. On search engines and social media, “recommendation algorithms” leverage user data and history to curate information for billions of people. In their simplest form, algorithms are instructions or sets of rules—often used by computers—for completing a task. At their most complex, they drive machine learning and enable artificial intelligence (AI) to grow smarter and more sophisticated by the second. 

With such sweeping capacity to shape how individuals and societies order and consume information—from the mundane recommendations of photo feeds and shopping lists to the grave amplification of extremist conspiracy theories that cause real-world terror—algorithms (and their designers) hold some responsibility for the social and political consequences of the content they propagate and the decisions they advance. 

The need for AI governance, particularly to rein in algorithms, is increasing—and policymakers have demonstrated an appetite for it. This October, the White House published an AI Bill of Rights with a blueprint for addressing “algorithmic and data-driven harms” and potential remedies. Lawmakers in the US Congress have proposed legislation to limit algorithmic promotion of extremist content by holding social-media platforms liable if certain forms of amplified content lead to offline violence, with other bills on the subject under consideration as well. China implemented a law in 2022 to reduce algorithmic influence on public opinion by enabling users to decline algorithmic recommendations on websites and apps. (The law was part of China’s pursuit of “positive energy” online, under the country’s aggressive censorship.) The EU’s Artificial Intelligence Act, the first major, still-pending regulatory framework for AI that could set global standards, strives to curb algorithmic bias. The EU’s General Data Protection Regulation (GDPR) also offers guidelines on when companies can and can’t use algorithmic automated processing for decision-making—for example, regarding who to offer a loan to or at what interest rate.  

Regulating algorithms is a broad and complex challenge, and pushback by the tech industry along with legal hurdles could halt even the most ambitious regulators. The public, and even policymakers, often lack the conceptual clarity to identify, define, and classify algorithms. And because it can be difficult to prove causation between algorithmic decision-making and the behavior or opinions of individuals influenced by it, accountability is hard to track. 

Further breakthroughs may happen below the national level. New York City is reviewing the use of algorithms in decision-making across its government agencies and offices. The City Council curtailed the use of AI algorithms in decisions about hiring and promotion. And these steps are just the beginning, as state houses and activists energetically join the race to shape this new frontier. 

Danielle Miller, Assistant Director, Scowcroft Strategy Initiative

Prior to joining the Atlantic Council, Miller worked in the US House of Representatives and was a research assistant at the University of California Berkeley’s Institute of European Studies.

In the days after the Kremlin launched its illegal war on Ukraine, Western companies based in Russia started fleeing the market, fearing unprecedented transatlantic sanctions, consumer backlash for continuing to do business with an invader country on an imperialist bender, and investor pressure to maintain profit margins. Now, as tensions between the West and China escalate, wary investors and multinational corporations may be starting to preemptively shift their market presence, supply chains, and investments away from China to insulate themselves from similar future impacts should the Sino-transatlantic relationship deteriorate.  

Among the most interesting early developments: Apple, which has a huge production footprint in China, has decided to shift production of its iPhone 14 model to India, while some of Google’s production for the new Pixel phone will likely be heading to Vietnam. Another space to watch is pension funds, as growing concerns about political risks are prompting discussions about potentially exiting or at least reducing exposure to the Chinese market.   

While it’s still early to call such decisions formal decoupling, these signs point to Western companies’ unease about the state of the Sino-transatlantic relationship, as well as a preemptive, corporate-led fragmentation of markets and supply chains in case tensions between China and Western countries bubble over. The private sector’s concerns about China’s restrictive zero-COVID policies, which have led to recurring lockdowns and disruptions at factories, may also be a factor in these developments, but the roots of these corporate moves can be traced back further to extensive tariffs and other economic tit-for-tat measures between China and the West—as well as nervousness about China’s own pursuit of self-sufficiency via efforts such as its “Made in China 2025” initiative. At stake in how these trends play out is nothing less than the future of globalization as we know it, along with the shape of the multipolar geoeconomic order, in which countries such as India will likely play an enhanced role.   

Anca Agachi, Associate Director, Transatlantic Security Initiative

Previously, Agachi worked for the EU’s European Defence Agency on defense capability development projects in the information security and space domains, and served as a United Nations Youth Representative for Romania, focusing extensively on the UN 2030 Agenda and sustainable development goals.

The two main reasons why consumers are reluctant to buy electric vehicles? They cost a lot and can’t get very far on a charge. But a battery that could make electric cars cheaper, more efficient, and thus more popular may be on the horizon. The next breakthrough could come not by way of an updated lithium-ion battery—the kind that powers most electric vehicles on the road today—but rather by using current battery technology in different form through structural batteries built into a car’s frame. This has the effect of reducing the car’s weight (a chassis made of battery cells isn’t as heavy as a chassis plus a separate battery) and a lighter car can travel farther on a single charge. The potential benefits go far beyond increasing range. Integrating the battery into a car’s chassis could also cut down on manufacturing costs and make cars cheaper, while strengthening the body of the car as well.  

Tesla has experimented with structural batteries in its Model Y cars and GM used them in the electric model of its Hummers, but their versions have yet to yield broader adoption. Yet technical development among automakers and other actors is ongoing and promising. Researchers at Sweden’s Chalmers University of Technology, for example, recently developed a more efficient structural battery that performs ten times better than its predecessors. Right now, electric vehicles are driven mostly by the wealthy: In the United States, for instance, 78 percent of federal electric-vehicle credits go to those with incomes over $100,000. If structural batteries can deliver on their promise, it will result in many more electric vehicles on the road around the world, democratizing ownership.  

Imran Bayoumi, Assistant Director, Scowcroft Strategy Initiative

Bayoumi graduated with his master’s degree in global affairs from the Munk School at the University of Toronto where he held a Joseph-Armand Bombardier Canada Graduate Scholarship. He also holds a BA from Queen’s University in political studies.

An uneven post-COVID-19 economic recovery has stoked a labor-rights movement in the United States and efforts to unionize in some of the country’s largest corporations—from Starbucks to Amazon to Trader Joe’s. Around the world, meanwhile, similar fallout from the pandemic has produced another phenomenon: Platform workers—those who work for organizations that provide services directly to consumers through an online platform—are leading efforts to create better working conditions for themselves. Strikes and other protests from Brazil to the United Kingdom to the Philippines and beyond speak to rising unrest among these workers. The causes for disputes and the types of protest vary across regions, but concerns about pay are often a primary driver of the activity.  

Such developments are significant in part because platform workers are a subset of the informal economy, which encompasses economic activities that are not monitored by the state. These activities include a wide range of work—from domestic labor to rideshare driving to market stands. More than 60 percent of the world’s adult labor force operates, at least part-time, in the informal sector, and on average that sector represents 35 percent of gross domestic product in low- and middle-income countries. In many cases, particularly in emerging markets and developing economies, platform workers are not aiming to formalize their economic activities. But their budding efforts to improve their working conditions could alter the world of work for the better, more strongly linking them with government protections and helping curb global poverty and precarious employment. 

Caroline Multerer, Deputy Director of Operations, Scowcroft Center for Strategy and Security

Prior to joining the Atlantic Council, Multerer was a program associate at Jones Group International, a global consulting firm owned by General James L. Jones.

One approach to combating climate change is geoengineering, or deliberate, large-scale, technologically based interventions in the environment to mitigate some of the effects of climate change. These include removing carbon dioxide from the atmosphere and reflecting the sun’s rays back into space. Futuristic though it may sound, geoengineering is already here. China and the United Arab Emirates have undertaken efforts to “seed” clouds by artificially increasing the amount of precipitation they hold and creating rain. Researchers from the UAE’s National Center of Meteorology have looked into creating an artificial mountain that would induce cloud formation and rain. Other countries, including China, India, and the United States, are making steady progress in advancing their geoengineering capabilities. The 2022 federal appropriations act, for example directed the US Office of Science and Technology Policy to develop a multi-agency group for coordinating research on solar geoengineering. This form of climate engineering, where sunlight is sent back into space, seems most likely to have the biggest impact on limiting the consequences of climate change and thus most likely to be pursued. 

But along with its promise solar geoengineering also brings numerous risks, including the potential alteration of regional weather patterns. There’s also the increasing likelihood that, given the pace of climate-driven impacts such as floods, droughts, severe storms, and heat waves, a country or multiple countries will attempt to geoengineer the planet unilaterally, before the underlying science is solidified and before adequate global governance mechanisms are in place. 

Imran Bayoumi, Assistant Director, Scowcroft Strategy Initiative

Bayoumi graduated with his master’s degree in global affairs from the Munk School at the University of Toronto where he held a Joseph-Armand Bombardier Canada Graduate Scholarship. He also holds a BA from Queen’s University in political studies.

Although Japan and South Korea normalized diplomatic relations in 1965, their relations have continued to be complicated by the legacy of Japan’s colonization of Korea from 1910 to 1945, memories of World War II, and disputes over how to compensate Korean women who were forced into wartime sexual slavery by the Japanese military. 

Despite this history, deeper reconciliation between the two countries, while politically difficult, is not an impossibility. In one indicator of a coming thaw, a meeting between South Korean President Yoon Suk-yeol and Japanese Prime Minister Fumio Kishida on the sidelines of the 2022 United Nations General Assembly, framed as a brief, informal gathering to avoid setting off domestic opposition at home, marked the first bilateral meeting between the leaders of these nations in three years. In another sign, the Japanese and South Korean publics are coalescing around concern about China. Were such a rapprochement to occur, it would dramatically alter the geopolitical environment in Asia while delivering significant benefits to both countries. Japan and South Korea face common and acute threats from China, North Korea, and Russia. With better relations, the two countries could pursue closer bilateral military ties, reach mutual understandings of regional threats, and develop responses to crises as they emerge. South Korea, one of the world’s leading advanced economies, could get more involved in the Quad grouping of Australia, India, Japan, and the United States. The United States would be able to count on both nations to counterbalance China’s influence in the region, while the three could promote shared values throughout the Indo-Pacific. 

Imran Bayoumi, Assistant Director, Scowcroft Strategy Initiative

Bayoumi graduated with his master’s degree in global affairs from the Munk School at the University of Toronto where he held a Joseph-Armand Bombardier Canada Graduate Scholarship. He also holds a BA from Queen’s University in political studies.

Global Foresight 2023

In this year’s edition of Global Foresight, the Atlantic Council’s senior experts identify the top risks and opportunities for 2023. Our foresight team spots “snow leopards” that could have major unexpected impacts in 2023 and beyond. And we share findings from our survey of global strategists and foresight practitioners on how human affairs could unfold over the next decade.

Learn more Full survey

Atlantic Council Strategy Paper Series Jan 9, 2023

Welcome to 2033: What the world could look like in ten years, according to more than 160 experts

To survey the future, we polled global strategists and foresight gurus on our most burning questions about the biggest drivers of change over the next decade. Check out their forecasts on everything from the prospect of nuclear proliferation to the probability of great-power war to the potential for more global volatility.

Read More

Atlantic Council Strategy Paper Series Jan 20, 2023

Six ‘snow leopards’ to watch for in 2023 

Atlantic Council foresight experts spot the underappreciated phenomena that could have outsize impact on the world, driving global change and shaping the future.

Brazil China

Atlantic Council Strategy Paper Series Dec 23, 2022

The top 23 risks and opportunities for 2023

The war in Ukraine changed the world in 2022. How will it continue reshaping global affairs in 2023 and what else looms on the horizon? The Atlantic Council’s top experts brought their globe-spanning expertise to the task of forecasting the near future.

Africa Americas

The post Six ‘snow leopards’ to watch for in 2023  appeared first on Atlantic Council.

To get there, though, they’ll need other nations to provide more help than they have in the past, said Davis. “We are gratified that the United States has reengaged with us,” remarked Davis, referring to the United States as “kith and kin.”

Speaking on Tuesday at an Atlantic Council Front Page event, Davis was hopeful following a meeting with US Vice President Kamala Harris in Washington, DC.

Still, the Bahamian leader did not mince his words when speaking of the challenges the Caribbean faces, as climate change continues to increase the frequency of deadly hurricanes and global instability continues to drive some of the highest energy and food prices in the Western Hemisphere.

Read on for more highlights from his remarks and conversation with Jason Marczak, senior director of the Adrienne Arsht Latin America Center at the Atlantic Council.

 “Climate change must be more than a buzzword”

• “Small-island and developing states throughout the Caribbean must come to terms with the full extent of our vulnerability,” Davis said in light of the rising threat that climate change poses to the region. He cited the particularly grim challenge facing Dominica, an island nation in the Lesser Antilles, which is still recovering nearly five years after Hurricane Maria hit. Davis said that the hurricane inflicted so much damage that 50 percent of the country’s gross domestic product essentially blew away in a single night—a fate more Caribbean countries could face if climate change continues unabated.
• As hurricanes and rising water levels further threaten Caribbean islands, it is becoming more urgent to fully fund climate initiatives. “What we need is more access to climate-change-specific funding to mitigate the damage being inflicted each day,” Davis said.
• On working toward a switch to renewable energy: “We must first acknowledge that this is not a one size fits all discussion,” Davis said. The issues facing oil-rich countries, such as Trinidad and Tobago, are vastly different from those of his own country, Davis added, where the pivot to solar energy is more immediately necessary as energy costs soar.

More banks, more security

• Since 2015, access to global finance has quickly worsened for many Caribbean countries and businesses as many international banks and financial institutions operating in the region have chosen to de-integrate and de-bank, cutting off their services from the region. Countries whose economic development depends on remittances, such as Jamaica and Haiti, or tourism, such as The Bahamas and those in the Eastern Caribbean, have been hit particularly hard, Davis explained.
• “Sixty percent of unbanked adults in the region cite cost as a barrier to financial services,” Davis said, stressing the need to give Caribbean citizens access to financial services. “In the Bahamas, on less populated islands, people have been left without a single commercial bank.” He highlighted the work of the Atlantic Council Caribbean Initiative’s Financial Inclusion Task Force, calling it “a conduit for solving these persistent issues.”
• Caribbean citizens are feeling the effects of global crises in the form of worsening financial access, high electricity prices, and food insecurity. “CARICOM suggests that as much as 57 percent of the English-speaking Caribbean faces food-security issues,” Davis said. Together, Davis said, CARICOM’s “work can save lives and livelihoods” as “we have an opportunity to make historic advancements in regional energy security, food security, and financial inclusion.”  

A partner to the north

• Davis was happy to be able to meet “one on one, face to face” with Harris, hoping that Washington and Nassau will continue to strengthen relations after a period of relative silence from the White House. “Nature abhors a vacuum,” Davis said, “and if attention is not paid, someone else will pay the attention.”
• The Bahamas can also be a partner to the United States on regional security issues. “We are on the migratory path to the United States, and many don’t get there. They stay in The Bahamas,” Davis said, while referencing a recent wave of Haitian migrants making their way to the United States in the wake of severe political instability in Haiti.

Nick Fouriezos is an Atlanta-based writer with bylines from every US state and six continents. Follow him on Twitter @nick4iezos.

Watch the full event

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The Biden administration is under increasing pressure from progressive leaders in Latin America and the US Congress to compel Bolsonaro to leave the United States. While the Biden administration needs to demonstrate moral leadership in upholding democracy and the rule of law, acting too hastily could fuel the flames of Brazil’s increasingly polarized politics and do more damage to democracy in the long term. In order to navigate this politically sensitive situation, the US government must follow established legal processes and ensure Bolsonaro does not undermine Brazilian democracy from US soil.

Ideally, Bolsonaro—who may have entered the United States on a diplomatic visa, which would have expired when his successor was sworn in on January 1—would simply return to Brazil voluntarily. He has said he plans to accelerate his planned departure at the end of January, which would resolve the problem.

Should Bolsonaro not leave voluntarily, it may take years to compel his departure, as the history of high-profile extradition requests to the US government shows. However, today there is hope that Bolsonaro will be persuaded to leave the United States of his own accord because of the possibility that he could face years of shameful publicity trying to stave off the extradition the Brazilian government, when it decides the time is right, is almost sure to seek.

While Bolsonaro would have ample opportunity to challenge the evidence against him in US courts before any action is taken to extradite or remove him, the Brazilian government would have an equal opportunity to make the case for Bolsonaro’s responsibility for the riots before the world’s media. The US government also would have the opportunity under US law to provisionally arrest Bolsonaro for at least several months, an indignity he may prefer to avoid.

Since 1964, the United States and Brazil have agreed by extradition treaty that each country must “deliver up” those charged with or convicted of certain enumerated crimes—which include destroying government property, as happened in Brasília—when committed within the territorial jurisdiction of the requesting country and when criminalized in both countries.

While there are some exceptions for when the offense is of a “political character,” the treaty notes that “[c]riminal acts which constitute clear manifestations of anarchism or envisage the overthrow of the bases of all political organizations will not be classed as political crimes or offenses.” It is unlikely that a court would rule that the exception for acts of a “political character” would apply in Bolsonaro’s case, if he is found culpable, because the incitement resulted in violence.

To avoid getting mired in political sensitivities, the Biden administration would be wise to pursue three immediate priorities.

1. Follow the law—even if it moves slowly

First, the White House should demonstrate what the rule of law looks like. If Bolsonaro chooses to stay in the United States, the Biden administration should urge the Brazilian government to initiate a formal extradition request. While it could be appealing to swiftly end Bolsonaro’s presence in the United States by exercising the authority that the president and the secretary of state have to declare him persona non grata (if he actually entered on a diplomatic visa) or to revoke his visa and have the Department of Homeland Security remove him, Bolsonaro would still have the right to contest that in court. In the end, little time would be saved if Bolsonaro wants to delay his return.

The question over Bolsonaro brings to mind one faced by the Obama administration in 2016, when Turkey’s government requested the extradition of Fethullah Gülen, a Turkish religious leader living in Pennsylvania, following a failed coup against Turkey’s government by some of Gülen’s supporters. However, despite repeated urging (including from then-Vice President Joe Biden) and expert-level consultations in which the Department of Justice explained US extradition requirements to Turkish counterparts, the Turkish government never presented evidence sufficient to convince a US magistrate to turn Gülen over to Turkey for trial.

Insistence on following established legal processes in the Gülen matter allowed the US government to navigate a politically sensitive situation without eroding the rule of law, even under serious pressure from the Turkish government.

While a formal extradition process for Bolsonaro would take several years to unfold, starting with the issuing of a warrant and a hearing to establish whether sufficient evidence exists to sustain the charge, this would keep Bolsonaro out of Brazil and, perhaps, allow for restrictions on his access to media and electronics that could be used to incite supporters to further violence.

From there, the process involves several layers of preliminary review by the US Department of State and a probable cause determination by the US Department of Justice before the case is forwarded to the US attorney for the district where the individual is located. An extradition order is not appealable, but Bolsonaro could petition for a writ of habeas corpus to ensure that he gets a hearing. The US secretary of state then makes the final decision whether to extradite.

The Biden administration should be clear that the length of the process is not any indication of US government reluctance to turn Bolsonaro over or interest in delaying the process. Bolsonaro’s status as a former head of state does not privilege or penalize.

2. Provide US law enforcement and intelligence support to Brazil

Second, the Biden administration should also support efforts to hold those responsible for the January 8 attack accountable for their assault on democracy by promising total cooperation from US law enforcement and intelligence agencies to share what they know, including any information regarding Bolsonaro’s role in instigating, directing, or supporting it.

A public announcement of US law enforcement’s full cooperation would have a chilling effect on Bolsonaro’s capacity to machinate disruptions to Brazil’s democracy from his current location in Orlando, Florida, given the ability, and obligation, of US law enforcement and intelligence agencies to prevent acts of violence or crime emanating from a foreign national on US soil.

3. Allow civil cases to run their course

Third, Bolsonaro no longer holds any official position, so in the United States, he is subject to US laws for civil damages—and the Biden administration should not shield him from culpability. His assets can be tied down or even frozen while US courts decide whether he is liable for the January 8 riots and subsequent events. He could also be required to give depositions and provide evidence about his own actions even outside of any criminal or extradition proceedings.

Life in the United States could quickly look less and less attractive for Bolsonaro. The threat of being cut off from his supporters while under the watchful eye of US law enforcement agencies may be the deciding factor in whether Bolsonaro decides to stay in the United States or go home. Either way, he will face justice.

Gissou Nia is a human rights lawyer and director of the Strategic Litigation Project at the Atlantic Council. Follow her on Twitter: @GissouNia.

Tom Warrick is a senior fellow at the Scowcroft Center for Strategy and Security’s Forward Defense practice at the Atlantic Council. He served in the Department of State from 1997 to 2007 and as a deputy assistant secretary in the Department of Homeland Security from 2008 to 2019. Follow him on Twitter: @TomWarrickAC.

The post As Brazil investigates Bolsonaro’s role in anti-democratic riots, should the US kick him out? appeared first on Atlantic Council.

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It’s a shock to the system. One week after new Brazilian President Luiz Inácio Lula da Silva was sworn into office, thousands of supporters backing former President Jair Bolsonaro—who falsely claimed that October’s election had been stolen from him—descended upon the country’s Congress, Supreme Court, and presidential palace, leaving shattered windows and overturned furniture in their wake. Now that authorities have cleared the protests and launched an investigation into security failures, our experts break down what’s to come.

• Jason Marczak (@jmarczak): Senior director of the Adrienne Arsht Latin America Center
• Iria Puyosa (@NSC): Senior research fellow at the Digital Forensic Research Lab
• Valentina Sader (@valentinasader): Associate director and Brazil lead at the Adrienne Arsht Latin America Center

Failures abound

• Brazil’s January 8 triggered comparisons to the United States’ January 6 attack. “But that is an oversimplification,” Jason says. “In Brazil, rioters were focused on absolute destruction of Brazil’s legislative, judicial, and executive buildings without the ability to disrupt the democratic order.”
• Iria points out that Bolsonaro’s supporters had been planning publicly for days, and the call to action “was not made on fringe or secret sites but in public groups and channels” on TikTok, YouTube, Telegram, and WhatsApp. Security forces “had the chance to take preventive measures,” she says, calling it “inexplicable” that Brazilian authorities never “established strong security controls.”
• Calls rose on Sunday for stronger regulation of social media, Iria tells us, even though Brazil has one of the more “vigorous” regulatory regimes in the region. One way Brazilian policymakers can tackle the problem, she says, is to improve intelligence agencies’ capabilities to monitor open-source data that provides “early warnings” about extremist threats—but in a way that doesn’t “limit freedom of expression and association of citizens.”
• While Lula wasn’t even in Brasília at the time, Jason says that the riots are still a “wake-up call” for the Lula government because they highlight the risks that lie ahead for “the continued peaceful functioning of Brazil’s institutions.”

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Lula’s moment

• “Democracy prevailed, but it’s cracked,” Valentina tells us. While Brazil’s democratic institutions have proven resilient, “they still must be strengthened.”
• According to Valentina, the fact “that some police forces, officials, and financial backers appear to have enabled this anti-democratic vandalism underscores the danger to Brazil’s democratic system.”
• But politicians from across the political spectrum have responded to the riot with an “eagerness to defend democracy,” a rare moment of “common ground,” Valentina says. “Lula must seize the opportunity to pacify the country and gain political power in Congress” to show the strength of democracy, punish wrongdoers, and enact key planks of his policy agenda. 

Friends in need

• US President Joe Biden quickly condemned the attack on Sunday. Jason tells us that next, his administration should “take action to reassure the new Lula government that US support will not be in statements alone.”
• That could take the form of a Lula visit to Washington early this year. “That visit should be prioritized and scheduled as soon as possible,” Jason says, “to show Lula and allies around the hemisphere that the United States is here to help when partners are in need.”
• Valentina says the United States can view January 8 as “yet another failed attempt by the extreme right to undermine democracy.” But “amid global trends of declining democratic freedoms and political instability across Latin America and the Caribbean, which country is the next target?”

The post How Brazil can respond to its democracy stress test appeared first on Atlantic Council.

Click to jump to an expert reaction:

Jason Marczak: January 6 comparisons are an oversimplification, but the US has a role to play now

Valentina Sader: It’s Lula’s time to show strength as democracy is challenged

Iria Puyosa: Brazilian intelligence agencies failed. Here’s what they can do now.

January 6 comparisons are an oversimplification, but the US has a role to play now

Brazil is a divided nation. But hopefully, unlike in the United States, those divisions do not play out in holding accountable those responsible for Sunday’s attacks. Leaders across the Brazilian political spectrum have condemned the violence; what is needed are swift actions to hold responsible those directly and indirectly complicit in the ransacking of Brazilian institutions. That started on Sunday with the arrest of hundreds of looters and the order by Supreme Federal Court Justice Alexandre de Moraes calling for the ninety-day removal of Federal District Governor Ibaneis Rocha following the absolute failure of Federal District security.

Comparisons will continue to be made to January 6. But that is an oversimplification of what happened in Brazil. The January 8 rioters took their cues from the United States, but, in Brazil, rioters were focused on absolute destruction of Brazil’s legislative, judicial, and executive buildings without the ability to disrupt the democratic order. Lula had taken office one week earlier and was not even in the capital city at the time. Still, for the Lula government, the Brasília violence is a wake-up call regarding the forces that will continue to undermine the continued peaceful functioning of Brazil’s institutions.

What should the United States do? Unlike the reaction to the recent self-coup in Peru, from left to right, governments across the Americas and Europe voiced a loud and resounding condemnation of the Brasília attacks. Multiple US officials, including President Joe Biden, forcefully spoke out. This is the moment for the United States to take action to reassure the new Lula government that US support will not be in statements alone. A potential Lula visit to Washington is in the cards for early in the year. That visit should be prioritized and scheduled as soon as possible to show Lula and allies around the hemisphere that the United States is here to help when partners are in need.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

It’s Lula’s time to show strength as democracy is challenged

January 8, 2023 will go down as an ugly day in Brazilian history. The past few months have been clouded by the fear that a January 6-like event would take place in Brazil, and that fear sadly came to fruition on Sunday. One week separates Lula’s inauguration, a celebratory moment for the democratic process and the peaceful transition of power, and this weekend’s violence.

Inspired by the United States’ January 6 riots, the attacks in Brasília targeted all three branches of government. The fact that some police forces, officials, and financial backers appear to have enabled this anti-democratic vandalism underscores the danger to Brazil’s democratic system. The repercussions of this day will be long-lasting.

The United States and the West should see what happened in Brazil as yet another failed attempt by the extreme right to undermine democracy. But amid global trends of declining democratic freedoms and political instability across Latin America and the Caribbean, which country is the next target?

In Brazil, democracy prevailed, but it’s cracked. The country proved that its democratic institutions are resilient, but they still must be strengthened. Lula has an even greater opportunity to do that now. The horror of the day and the eagerness to defend democracy pushed politicians from across the political spectrum to find common ground. That’s a rarity in Brazilian politics, and Lula must seize the opportunity to pacify the country and gain political power in Congress, backed by a pro-democracy front, to show the strength of his government and of Brazilian democracy, to punish those involved, and to move the needle forward on key policy priorities.

—Valentina Sader is the associate director and Brazil lead at the Adrienne Arsht Latin America Center.

Brazilian intelligence agencies failed. Here’s what they can do now.

Brazil’s security and intelligence agencies failed to take effective measures to prevent the assault on the National Congress, the Federal Supreme Court, and the Presidential Palace. They are not the first security forces taken off guard by a popular uprising or an attempted coup d’état. But they had a chance to take preventive measures, given the amount of open-source data available.

Contrary to what typically occurs in attempted coup d’états, the assault on the Brazilian government was publicly announced. The call was not made on fringe or secret sites but in public groups and channels with thousands of followers. Videos, flyers, and texts indicating places and times of departure for Brasília, age requirements to participate, necessary supplies for the trip, and the objective of the mobilization circulated on TikTok, YouTube, public Telegram groups, and public WhatsApp groups for several days.

It is inexplicable that the Brazilian authorities have not investigated these calls and established strong security controls to prevent pro-Bolsonaro extremists from taking over the Square of the Three Powers.

On Sunday, calls began to rise for greater regulation of social media and messaging platforms, even as Brazil has been among the more vigorous countries in Latin America in restricting the circulation of misleading or polarizing content on messaging platforms. Policymakers should consider how intelligence agencies can activate resources for open-source monitoring that do not limit freedom of expression and association of citizens but provide early warnings about actual threats from extremist activities.

—Iria Puyosa is a senior research fellow at the Atlantic Council’s Digital Forensic Research Lab.

The post Experts react: Brazil has suffered its own attack against democracy. Here’s what the government and its allies can do next. appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: On January 1, Luiz Inácio Lula da Silva was sworn in as president for a third term after defeating incumbent Jair Bolsonaro.
• Outlook: According to the Economic Commission for Latin America and the Caribbean (ECLAC), economic growth will continue to slow in 2023 and reach 1.3 percent.
• Venezuela: The opposition-led legislature dissolved the interim government led by Juan Guaidó. The vote signaled that members of the opposition had lost faith in Guaidó’s ability to oust Maduro. The United States will continue recognizing the 2015 National Assembly as the last remaining democratic institution in Venezuela.

Monitoring economic headwinds and tailwinds in the region

•  Brazil: In 2022, trade surplus reached a record high of $62.3 billion. Total exports also reached a 335 billion high, helped by a boost in prices in the agriculture and livestock sector.
• Argentina: The IMF disbursed a tranche of $6 billion from its $44 billion program with Argentina, citing positive indicators including falling inflation, a better trade balance, and foreign reserves. 
• Colombia: Minimum wage will increase by 16 percent this year, to $242.7 per month. President Petro said the move would boost an economy slowed by inflation. 
• Dominican Republic: The S&P upgraded the country’s credit rating from “BB-“ to “BB,” highlighting its strong recovery from the pandemic and long-term growth potential. 
• El Salvador: The government will receive a $150 million loan from the CAF development bank, designed to strengthen its education system in the wake of the pandemic.  
• Peru: The government launched a $1.6 billion plan to increase welfare and investment in regions gripped by protests following the ouster of former president Pedro Castillo. 

In focus: Nearshoring opportunities in the Americas

With the next North American Leaders Summit (NALS) set for this incoming week (January 9 and 10), nearshoring – the relocation of supply chains closer to the United States – is rising in importance.

Rising costs of and delays during shipping, coupled with the pandemic, have made businesses in the United States wary of relying on supply chains across the Pacific. As a result, some 400 companies explored reshoring to Mexico from Asia in 2022. Mexico’s manufacturing sector is now larger than it was before the pandemic, and Mexican exports to the United States have rapidly increased. Firms such as Walmart have already relocated some business to Mexico, while Tesla is planning a new factory in northern Mexico. NALS will pay particular attention to the electric vehicle production chain in North America.

Health + Innovation

• Chile: In an effort to curb the spread of the BF.7 COVID-19 subvariant, travelers coming from China are now required to show a negative PCR test.
• Haiti: Over 14,700 suspected cholera cases have been reported since December. Nine in every ten cases are from areas hit hard by food insecurity.
• PAHO: Most countries in LAC invest less than the minimum 6 percent of GDP in health and allocate less than 30 percent of the health budget to the first level of care as recommended by the regional health organization.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 7, 2022 appeared first on Atlantic Council.

1. Why did Biden expand the parole program to Cuba, Nicaragua, and Haiti?

Putting in place the tools for a more orderly asylum process at the US-Mexico border is pivotal with the surge in encounters. Today’s announcement of an expansion of the Venezuela parole program to Cubans, Nicaraguans, and Haitians will hopefully help to dissuade asylum seekers from risking their lives to make the trek north. 

In October and November 2022, more Cubans (sixty-five thousand) and Nicaraguans (fifty-five thousand) arrived at the southwest border than in fiscal years 2020 and 2021 combined. The twelve thousand Haitian arrivals in those two months amount to one fifth of their total fiscal 2022 arrivals. 

But people won’t stop leaving while they have little hope for a better life in their own countries. That is the case in Cuba (where inflation is soaring and repression escalating), Daniel Ortega’s Nicaragua (where democratic freedoms no longer exist), Nicolás Maduro’s Venezuela (with its own soaring inflation and repression), and gang-controlled Haiti. So border policies must be accompanied by new US and partner country strategies to improve livelihoods in these migrants’ countries of origin. And the United States must hold those like Ortega accountable for his actions to weaponize migration by doing things such as lifting the visa requirement for Cubans in order to more easily facilitate passage to the United States. 

But the border is about more than migration. It is a vital source of commerce that promotes the creation of US jobs. Our recent work shows that just a ten-minute reduction in border wait times could have a $5.4 million annual impact on the US economy and create nearly nineteen thousand jobs in Mexico. Greater commerce translates into greater security as well. Economic growth creates jobs, making it less desirable to leave home. It is absolutely achievable to have a border that is more secure and more efficiently promotes commerce. That should be the goal.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

2. What impact will this have at the border?

Biden’s visit to the border ahead of the North American Leaders Summit next week is an important step toward the amelioration of a crisis that has long afflicted the US-Mexico border. Smart border policies that streamline crossing processes not only benefit issues around migration, but also help decongest communities that are regularly choked by vehicular and pedestrian traffic.

Initiatives such as the New Migration Enforcement Process for Venezuelans have already decreased the percentage of attempted migrant crossings by nearly 90 percent. The expansion of such programs to additional groups could have similar effects, thus alleviating burdens on the health care and sanitation industries, among others.

Additionally, as border agencies utilize their resources to confront surges in pedestrian traffic, wait times for vehicles exponentially increase. Subsequent carbon emissions deteriorate the air quality around ports of entry, directly affecting the health outcomes of local communities. Further, vehicles waiting in line for miles constrict local mobility, hindering residents’ ability to travel back and forth between school, work, hospitals, and more.

It is important to keep people at the center of border policy, and initiatives that aim to enhance secure and efficient crossings should be celebrated by not only the United States and Mexico but the region as a whole.

—Ignacia Ulloa Peters is an assistant director at the Adrienne Arsht Latin America Center.

3. Will Biden’s plan work?

The Biden administration’s announcement that it will surge resources to the southwest US border and speed up processing for asylum applicants is a most welcome response to the extraordinary surge of people from troubled countries such as Cuba, Nicaragua, and Venezuela. Nothing will satisfy some critics, but those who support security, economic prosperity, values, and the US history of welcoming refugees from troubled lands should see today’s announcement as good news.

One absolute essential is the need for additional resources and personnel to make this plan work. The administration needs to send Congress an urgent supplemental budget request and to invoke some of the president’s extraordinary authorities to get additional personnel at the border to achieve the goal of making definitive, binding determinations of asylum eligibility in days, not weeks. The administration needs additional resources to (1) integrate legitimate asylees and their families to make important social and economic contributions to US society or (2) return ineligible people to a place of safety under existing laws. The administration and Congress now need to put forward the resources needed to satisfy US values, security, and prosperity. This would be historic, and it is achievable.

—Thomas Warrick is a nonresident senior fellow at the Scowcroft Center for Strategy and Security’s Forward Defense practice and a former deputy assistant secretary for counterterrorism policy at the US Department of Homeland Security.

4. What should happen next?

The American people have a right to expect secure borders. Crucial to this is a fair, orderly, and efficient process for those seeking to come and for determining who may stay. Unfortunately, the United States’ current system is utterly broken, and this is particularly true of the asylum system—weighed down by a 1.6 million-case backlog, with each case taking years to resolve. This has encouraged thousands with marginal claims to make dangerous journeys to the US border every month, expecting that the United States will not only let them in but also allow them to stay and work during the years it will take for their asylum claims to be resolved.

The measures announced today by Biden are the latest in a series of efforts aimed at gaining control over this untenable situation—establishing orderly processes for those with legitimate asylum claims; providing opportunity for those desiring to escape repressive or criminal regimes in Venezuela, Cuba, Nicaragua, or Haiti; and working with Mexico and other nations to strengthen enforcement against those choosing not to use these legal processes and, instead, trying to sneak in.  

These are excellent steps, but band-aids. Congress needs to get involved—not only to provide the resources and legal fixes needed to expedite the resolution of asylum claims and better secure the border, but also to reform the immigration system more broadly, giving lawful status to those who have been here a while, expanding lawful channels for those wanting to come, and creating more efficient mechanisms for employers to hire the workers the US economy needs. Biden and Department of Homeland Security Secretary Alejandro Mayorkas deserve great credit for muddling through with the limited tools they have, but to truly get control of the border, Congress needs to put politics aside and fix the broken system.

—Seth Stodder is a nonresident senior fellow in the Scowcroft Center’s Forward Defense practice and a former assistant US secretary of homeland security for borders, immigration, and trade policy.

The post Biden just tightened US migration policy. Can he calm the surge at the border? appeared first on Atlantic Council.

The post CBDC Tracker was cited by CNBC TV 18 on the Bahamas’ progress in launching its CBDC Project. appeared first on Atlantic Council.

Online Event Tue, December 20, 2022 • 11:00 am ET

A conversation with Ecuadorian President Guillermo Lasso

A conversation around the priorities of the Lasso administration, the growing US-Ecuador partnership, and the main challenges affecting Ecuador and the region.

Americas Economy & Business Latin America Rule of Law

This week, Ecuadorian President Guillermo Lasso chose Washington—specifically, an event co-hosted by the Atlantic Council at the Inter-American Dialogue—to announce his plans to run for re-election in 2025. The announcement was part of his pitch, following meetings with US President Joe Biden and others, for newfound stability in a country that is finding its democratic footing. And he hinted that Washington could be a useful campaign ally.

“The Constitution of Ecuador allows re-election only once. For me that will be in 2025,” Lasso said on Tuesday. “Washington can certainly give a boost in confidence, and I can tell you that I am not going to shy away from that possibility.”

Here are some more highlights from Lasso’s conversation with Rebecca Bill Chavez, president and CEO of the Inter-American Dialogue:

Democracy on the agenda

• During his Washington trip, Lasso met with Biden, the US Agency for International Development, the Organization of American States, the World Bank, and the Inter-American Development Bank, coming away with nearly forty million dollars in commitments from the US government to support female entrepreneurs, fight child malnutrition, and protect the environment.
• Lasso said that he seeks to “continue working on economic matters with virtuous policies required by Ecuador, with more democracy and greater investment in social programs.”
• Following his triumph over President Lenin Moreno in April 2021, Lasso assured his audience that Ecuador has “fully returned to democracy.” He said his victory came against “a populist model characterized by penetrating power and then producing an implosion of democratic institutions.”

Economy on the rise

• Lasso said that in the past eighteen months his government has furthered a recovery for an economy that was in shambles, with a budget deficit of almost 7 percent of Ecuador’s gross domestic product (GDP) because of the COVID-19 pandemic. “We currently have a deficit of 3 percent [of GDP] that is expected to decrease even more in 2023. Fiscal deficits are a curse to the future of the nation, as it is debt that will eventually be assumed by our children and grandchildren. Our mission is to make sure that value is as low as possible.”
• Lasso touted how last week the International Monetary Fund (IMF) announced the successful completion of Ecuador’s twenty-seven-month program and authorized the final disbursement of seven hundred million dollars. It is the second time in twenty years that Ecuador has successfully completed an IMF program.
• The president also pointed out that Ecuador—which uses the US dollar as its currency—has the second lowest inflation in the Americas and the highest economic growth projection for 2023 in the region. Under his government, Lasso said, the economy “is in very good health.”

Security on the brink

• That economic success means Lasso’s main concern, as he put it, is “internal security.”
• He explained that the fight against drug trafficking “is not easy,” but he boasted of having seized three hundred tons of drugs, figures much higher than those of previous governments.
• Lasso noted that organized crime networks have responded to his aggressive enforcement with “violence in prisons and violence in the streets.” But he assured the audience that his government is working non-stop to confront the issue utilizing both the armed forces and the National Police.

Isabel Chiriboga is a project assistant at the Atlantic Council’s Adrienne Arsht Latin America Center and is originally from Quito, Ecuador.

Watch the full event

The post Why Ecuador’s president announced his re-election plans in Washington appeared first on Atlantic Council.

While many countries are still on the rebound from the COVID-19 pandemic, new crises—and their effects—are emerging, and are expected to continue into the next year. From global inflation to a costly energy crisis, and from food insecurity to new political shifts, how can the region meet changing dynamics head-on? And how might risks turn into opportunities as we enter a highly consequential 2023?

Join the Adrienne Arsht Latin America Center as we look at some of the key questions that may shape the year ahead for Latin America and the Caribbean, then take our signature annual poll to see how your opinions shape up against our predictions.

How might new regional collaboration take shape across Latin America and the Caribbean with a wave of new leaders? What decision points might shape government policy? Will Bitcoin continue to see the light of day in El Salvador? Are the harmful economic effects of Russia’s war in Ukraine in the rearview mirror for the region, or is the worse yet to come? Will China’s new foreign policy ambition translate to closer relations with LAC?

Take our ten-question poll in less than five minutes!

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The United States needs to further engage with Ecuador on trade to show its support for the current Ecuadorian government, which has focused on promoting core US interests of democracy and prosperity locally and regionally. Latin America and the Caribbean have undergone a major political shift in the last couple of years, and the United States needs to find ways to remain relevant in the region—starting with Ecuador.

Although US-Ecuador ties have advanced on multiple fronts this year, a concrete positive outcome from the partnership remains to be seen. In the past couple months, Ecuador has hosted five US senators, two undersecretaries, Biden’s special presidential advisor for the Americas, and US Trade Representative Katherine Tai. All of the visits have sought to strengthen bilateral ties on shared challenges such as counter-narcotic regulations, the Venezuelan refugee crisis, transnational crime, and commercial ties.

The growing partnership also resulted in passage of the US-Ecuador Partnership Act, requiring the State Department to increase cooperation with Ecuador’s government on areas of shared interest; an open line of credit between the US Federal Reserve and Ecuador’s central bank; the first visit from a South American president to the White House in 2022; and the creation of the Fair Trade Working Group. These are all steps in the right direction, yet they won’t result in lasting impact unless Washington helps Lasso’s government deliver tangible economic results locally to treat the discontent that culminated in an eighteen-day protest and an attempt to strip Lasso of his presidency earlier this year.

Online Event Tue, December 20, 2022 • 11:00 am ET

A conversation with Ecuadorian President Guillermo Lasso

A conversation around the priorities of the Lasso administration, the growing US-Ecuador partnership, and the main challenges affecting Ecuador and the region.

Americas Economy & Business Latin America Rule of Law

One of Lasso’s main priorities when he took office was to sign a free trade agreement with the United States. However, protectionist sentiments in Washington continue to frustrate Lasso’s efforts to explore the full potential of bilateral economic ties, since ongoing commercial talks are limited in scope. For instance, the Fair Trade Working Group focuses mostly on expanding the Trade and Investment Council Agreement, signed in 1990 and renewed in 2020 during Lenin Moreno’s administration. The working group will host negotiations on labor, environment, and digital trade. But Ecuador’s main exports are commodities—petroleum, bananas, seafood, coffee—which are subject to globally determined market prices. Therefore, the working group’s economic impact will likely be marginal at best for either country.

The United States’ lack of impact opens the door for China. Last week, Lasso announced that Ecuador’s free trade agreement with China is “practically signed.” Earlier this year, China surpassed the United States as Ecuador’s main commercial partner on non-petroleum goods. According to Lasso, the immediate potential of the free trade agreement will mean an additional one billion dollars in exports to China. Ecuadorian consumers will have access to high-tech products, supplies, tools, vehicles, and machinery at better prices. Ecuador also renegotiated its debt with China, securing savings of almost $1.4 billion, which Lasso said will be invested in social programs.

The absence of more comprehensive negotiations between Quito and Washington prevents the United States from counterbalancing China’s growing influence over trade and investment frameworks across the region, as Ecuador is set to become the fourth country in Latin America to have a free trade agreement with China. The Fair Trade Working Group must kick off those comprehensive negotiations, not only bringing Ecuador cutting-edge US technology and environmental expertise, but also enhancing the US economic presence and influence in the region, which is on decline in comparison to that of China.

Not a lost cause

There are still important ways in which Ecuador can use the momentum of both its growing partnership with the United States and the Fair Trade Working Group to expand the scope of commercial relations. In particular, Lasso should use this foundation to expand the Protocol on Trade Rules and Transparency, an agreement signed in 2020. Ecuador hopes to use the protocol to secure more US investment and market access for its main exports including many of its star agricultural products. At the White House meeting, Lasso and Biden should focus on advancing the negotiations of the Fair Trade Working group in its core areas, starting with digital trade.

The pandemic helped boost digital trade in the form of e-commerce, which grew by approximately 20 percent in Ecuador, from $2.76 million in 2020 to $3.22 million in 2021. That’s led 53 percent of Ecuadorian companies to focus on the development of mobile applications and other digital platforms and tools, in many cases setting them up without substantial infrastructure and/or regulations, increasing the risk for cyberattacks and unethical consumer data usage. This is a potential area of collaboration between the United States and Ecuador, as the Fair Trade Working Group can support Ecuador’s expansion of digital infrastructure, e-commerce platforms, and cybersecurity through both knowledge sharing and the provision of US cutting-edge technology to reduce cyber risks. This also provides an advantage for the United States: Ecuador ranks sixth in Latin America in retail purchases made online, opening an important market for absent US e-commerce giants such as Amazon. Similarly, public services that rely on secure digital systems, such as health care, transportation, and social security, would also benefit greatly from these efforts. For instance, the commercial debut of Quito’s Metro in March of next year would be the ideal pilot project for a cybersecurity collaboration.

Additionally, Ecuador can benefit from both the Biden administration’s and the working group’s focus on sustainable development and environmental conservation. However, it may be a double-edged sword for Ecuador, as petroleum and precious metals make up approximately 32 percent of its exports. As Ecuador’s main consumer of petroleum, the United States should help Ecuador build environmentally responsible industries. Modernizing Ecuador’s traditional energy and mining industries in a cost-effective way is necessary for the wider success of the global energy transition, and it will help prepare these sectors for green investments. A good starting point would be the mining sector, which, despite being underdeveloped, has emerged as the country’s third-largest export engine. There’s a bonus: Ecuador can provide US electric vehicle producers—newly energized by the Inflation Reduction Act’s tax breaks—with raw materials such as copper sourced closer to home.

Finally, labor is perhaps the most important—and complicated—area of focus. About 61 percent of Ecuador’s workers are informal. And one of the main ways to bring informal businesses into the formal economy is through financial inclusion. This working group can leverage its focus on digital trade to support the expansion of Ecuador’s digital payment systems to increase access to credit. Currently, Ecuador’s banking sector has relatively strict credit-access regulations, so much so that credit portfolios at cooperatives have been increasing rapidly, despite the fact that those cooperatives have little to no regulatory oversight and are much riskier than banks. Expanding digital payment systems to informal businesses would allow banks to monitor credit payments, set spending controls, help businesses build a credit history and provide financial literacy programs. This could ease banks’ concerns around lending to “riskier” businesses. If the United States can help bring about this kind of broader financial inclusion, it would go a long way toward improving its standing across the region.

Time for results

The United States certainly realizes the regional influence it gains from a strong partnership with Ecuador, but it is time to translate that value into action. Although the immediate economic impact of the Fair Trade Working Group will likely be minimal, it shouldn’t be disregarded. Both the United States and Ecuador should leverage the platform to advance action-oriented plans in digital trade, the environment, and labor. Both governments need to move fast to start delivering results, or else risk rendering the Fair Trade Working Group insignificant in the shadow of Ecuador’s billion-dollar trade deal with China.

Isabel Chiriboga is a project assistant at the Atlantic Council’s Adrienne Arsht Latin America Center and is originally from Quito, Ecuador.

The post As China’s influence grows, Biden needs to supercharge trade with Ecuador appeared first on Atlantic Council.

​​​​​What you should know

• Peru: President Castillo was ousted by lawmakers after he sought to dissolve Congress ahead of an impeachment vote.
• Brazil: The Economy Ministry rejected assertions by President-elect Lula’s transition team that Bolsonaro’s outgoing administration was leaving government finances “bankrupt.”
• Social outlook: A recent Economic Commission for Latin America and the Caribbean (ECLAC) report projects that by the end of 2022, LAC will have 201 million people living in poverty – an increase of 15 million compared to the pre-pandemic situation.
• ICYMI: On December 7, the Atlantic Council launched a paper on improving tax policy in LAC. Read it here.

Monitoring economic headwinds and tailwinds in the region

• Argentina: signed a new information-sharing agreement with the US designed to root out tax evasion. It could increase tax revenue for Argentina by $1 billion US.
• Barbados: concluded new funding arrangements with the IMF, $113 million US to continue its fiscal reform package and $189 million US towards its climate change response.
• Brazil: President-elect Lula announced that Fernando Haddad, former minister of education and mayor of São Paulo, would be his finance minister.
• Mexico: announced that additional consultations on the USMCA energy dispute would be held through early January, to ensure continued investment and confidence.
• Peru: was placed under a state of emergency after protests gripped the country. Political upheaval led S&P to lower the country’s economic outlook to “negative.”
• Transatlantic relations: Argentina called for reviewing the potential EU-Mercosur trade agreement, highlighting threats to local auto industry and barriers to agricultural exports.
• Uruguay: criticized Mercosur’s inaction on trade agreements with large economies, drawing criticism for its own independent negotiations with China and to join the TPP.

In focus: Guyana’s carbon credits

Guyana is the first country to issue carbon credits designed to prevent forest loss and the first under the ART’s REDD+ Environmental Excellence Standard to ensure integrity and independent verification. The Hess Corporation, which is a partner in an oil consortium led by ExxonMobil that operates in Guyana, will purchase $750 million US of these credits. This move reflects how resilient growth, balancing between the opportunities in the energy sector and protecting its valuable environment, has become a priority in light of climate change and stresses like the COVID-19 pandemic.