April’s Summit of the Americas was a complete and utter failure. Not only would it have gone unnoticed by the world had Hillary Clinton not drunk a cerveza in a Cartagena bar and had a few brainless Secret Service agents bothered to pay the prostitutes they hired, but the Summit did not produce a single resolution. All that the leaders in attendance, minus the seriously ill Hugo Chavez, were able to come up with as an excuse for hosting the Summit was their reluctant agreement that the war on drugs had been a failure. A waste of a summit to promote the waste of lives fought in a failed war.
How is this possible? How is it that all of the leaders of the Americas, including the most powerful man in the world, Barack Obama, could meet and not come up with a single agreement on anything that could improve any of their nation’s fortunes? How could there be no public pressure on them do so? Is Latin America, and in particular, the once mighty South America, that unimportant of a player on the world stage?
In a word, yes. For all of the limelight that has been shone on various South American country after country, from Argentina to Venezuela to Chile to the now omnipresent Brazil, each has failed to prove its mettle. Not a single one has managed to meet the expectations set for it. Instead, they disintegrate into cycles of erratic socialism, boom and bust economic cycles and enduring capital flight. The only improvement that South America has seen in recent years has been the conspicuous lack of military coups – and yet the bureaucratic authoritarian military regimes were what, in fact, promoted the confidence of foreign investors, for most of the coups were backed by the United States.
Brazil’s recent rise to fame is particularly relevant. With its now ten years of socialism under Lula and his successor Dilma Rousseff, Brazil has seemingly managed to beat the odds and attract foreign investment to help develop its endless natural resources. However, Brazil has to face more than just the stigma that has blighted other South American countries; it too has been characterized by boom and bust economic cycles. From the late 1960s and into the early 1970s Brazil showed spectacular economic growth that only ended in inflation, capital flight and crisis. Both then and now, Brazil has proven itself to be too dependent on imports and susceptible to an overly strong Real, their currency, hampering its ability to export. As economic growth for 2012 is projected to be nearer to 0% than at any time in the past five years, Brazil appears to be falling back into the Latin American trap.
Thus, it seems that Latin America can’t win. If it reverts back to its military regimes, the economy will only grow for a short period of time. If they continue to promote socialism without enforcing any structural changes in the lower classes’ access to government benefits, and if they continue to turn their backs on the United States by nationalizing industries (like Argentina and Bolivia have done in recent weeks for their oil and power companies), they risk reinforcing the worldwide perspective that Latin America is a mirage more than a reality or a hope of economic stabilization and growth.
Latin America is in need of dynamism. Having conquered the never-ending saga of unstable dictatorships, it needs to consolidate its democracies and open its doors to trade around the world. It needs to find other ways to attract the confidence of investors. It needs to excite international attention through sustainable development of its resources. To achieve that, it needs to rest on its socialist laurels and help lessen the income inequality gap in order to help the working class. They also need to invest in industries that will make their economies less import-substitute based and more export-oriented. To back it all up, it needs a fiscal plan that will keep its currencies undervalued in order to ensure that exports are competitive. In short, Latin America must do what it has promised to do for years and commit to real change. Without it, it dooms itself to a future where its potential is unrealized, and it is left in the economic shadows – permanently.
– Clara Bonnor