All Around the Neighborhood

A quick look at our amigos from Toronto to Tierra del Fuego

Andean Region

On the great-grandfather clock of time, 500 years is about a second. And in that second, European mestizos have managed to plunder this region of nearly all its mineral wealth, subjugate the Indian populations, and force on them Western laws and the Catholic Church. But if the recent coup in Bolivia, the 2002 elections in Peru, and the 1999 coup in Ecuador demonstrated anything, it was this: That one second of history is coming to an end. The Indians have teamed up with disgruntled coca growers and traditionally strong mining unions. Together they are putting their feet down -- and the collective stomp is shaking the mountaintops. Not surprisingly, natural resources remain central: gas in Bolivia and Peru, oil in Ecuador. The FTAA may look good to the ones who are shipping out the goods but not to those manning the pipelines. What's more, a realistic assessment of the value of the coca industry in these countries is critical, but the trade reps in Miami will treat the crop like the plague. Further complicating matters: The Andean nations' individual wants as countries will override their need to band together as a trading bloc.

•Civil Strife Index***

An increasingly volatile place to do business as Indians and coca growers join with traditional union powers to do the unthinkable: topple white-run governments.

•Life Expectancy 68 years

•Reefer Quality Index** •Literacy Rate 88%

•Foreign Debt Index $58 billion

It roughly breaks down this way: Peru $42 billion, Bolivia $3 billion, Ecuador $13 billion. Those figures can mislead, however. Bolivia was allowed to cancel substantial debt three years ago; Peru eliminated ten percent of U.S. debt by agreeing to stronger environmental regulations; and Ecuador recently managed a slick restructuring plan that eased some of the pressure.

•Trade Power Index *

•Poverty Rate 57%

•Corruption Index ****

Business cartels must push product (one guess -- it's not coffee) through the Andean region; lots of cash helps them get past government and law enforcement, and closer to the finish line: the American border.

Argentina

With 38 million people ready to run out any president who doesn't pay enough attention to domestic tranquility, the Argentine government must tread lightly when it comes to foreign investment, privatization, and international trade. After a financial free-for-all in the Nineties under former president Carlos Menem, the banking system collapsed in 2001. Angry citizens banging pots and pans brought down a succession of national leaders in December of that year. Current president Nestor Kirchner is very careful about what concessions he makes to the international community, whether it's grappling with the biggest loan default of all time ($155 billion) or further opening the country for trade. Not surprisingly, then, Argentina is Brazil's best buddy in the Mercosur common market (including neighbors Paraguay and Uruguay) that will try to wring trade concessions from the United States.

•Civil Strife Index**

What may have warranted one AK-47 three years ago gets two because of the continuing economic problems, labor unrest, and skyrocketing crime rate.

•Life Expectancy 73 years

•Reefer Quality Index*1/2

•Literacy Rate 97%

•Foreign Debt Index $255 billion

After being blackballed by all major financial institutions following last year's unprecedented default on International Monetary Fund loans, the worst may be over. Under president Nestor Kirchner, a payback plan is in the works.

•Trade Power Index **

•Poverty Rate 30%

•Corruption Index ****1/2

Argentina, long known as a place where a handful of cash gets you to the front of the line, has seen corruption worsen as an increase in political crime mirrors an increase in overall crime.

Brazil

Big bad Brazil. With a population of more than 175 million and an economy that outranks Canada, Brazil is by far the largest country in South America. It's also the United States' most powerful rival for control of the FTAA. Brazil has rallied the other nations to the South American common market known as Mercosur in order to negotiate as a bloc. Now the success of the FTAA talks may hinge on steel and oranges, Brazil's biggest exports. The X factor is Brazilian president and former steelworker Luiz Inácio Lula da Silva, of the left-leaning Workers Party. Many feared he would plunge the country into a populist quagmire when elected a year ago. Instead he's won over the Brazilian business community and the IMF, spurring economic growth while promoting social reform. With Mercosur muscle behind him, Lula might well force into play a version of the FTAA that is more than just a rubber stamp of U.S. interests.

•Civil Strife Index ***

This country's crime rate continues to cause problems; drug gangs, in particular, control large portions of major cities and threaten to tie up police for years to come; the one positive thing for business is that labor unrest should be at a minimum these days with Lula, the former sindicalista, in power.

•Life Expectancy 68 years

•Reefer Quality Index **

•Literacy Rate 85%

•Foreign Debt Index $430 billion

It looks like a long, hard financial journey for Lula's administration. Still the IMF continues to feed Brazil's economy by loosening restrictions on its payback plan and even kicking in more loans this year.

•Trade Power Index *****

•Poverty Rate 37%

•Corruption Index ***1/2

Police are at war -- manning-the-barricades, fighting-in-the-streets war -- with large drug gangs in major Brazilian cities, while political and white-collar corruption increases.

Canada

Cautiously, cautiously (this is Canada, after all), the second-richest nation in the proposed FTAA is pushing for its passage. Although far smaller than the U.S. economy, Canada's is similar in structure -- diversified, service-oriented, technologically advanced. Meaning that better protection for intellectual property rights and the opening of service markets to allow telecommunications, information, financial, and other such industries easier access to the 33 other FTAA markets is good for Canada. But this is Canada, so it has also taken the lead in promoting openness in the negotiations, encouraging debate, holding nationwide forums, and helping create the Civil Society Committee. All of which is no surprise coming from a country that boasts one of the lowest poverty rates in the world. Our northern neighbor is in no great rush to lose too many jobs or see its social-service net collapse, hence the Canuck rallying cry: "Moderation!"

•Civil Strife Index

Oh, Canada ... glorious and free -- of crime, terrorism, unrest.

•Life Expectancy 79 years

•Reefer Quality Index***

•Literacy Rate 97%

•Foreign Debt Index

Canada is quite truly debt-free -- regardless of what the Québecois think they're entitled to.

•Trade Power Index *****

•Poverty Rate 18%

•Corruption Index *

Safe cities, majestic mountains, good skiing, and little corruption -- what's not to like?

Caribbean

Twelve Caribbean countries have been involved in FTAA negotiations: Antigua and Barbuda, Bahamas, Barbados, Dominica, Dominican Republic, Grenada, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago. They've been trying hard to make their voices heard, particularly on matters of agricultural tariffs and incentives for small, developing economies. The problem: When reps from the Bahamas or Trinidad and Tobago sit down at the negotiating table with the U.S., Canada, and large South American economies like Brazil and Argentina, "it's like ants and fleas sitting down with elephants," as the Caribbean Tourism Organization's secretary general put it recently. Adoption of the FTAA would radically change the economic structure of a country like the Bahamas, for instance, where customs duties on imports -- which would be eliminated under the current FTAA draft -- account for 70 percent of the nation's revenue and where no formal laws regarding foreign trade exist at present. Trade ministers from the Caribbean have cited the European Union's inclusion of regional development funds for Spain, Portugal, and Ireland as an example of the kind of help they'll need to keep the FTAA from sinking their tiny economies. No such provisions exist in the current FTAA draft, and it remains to be seen whether the Caribbean countries have the negotiating power to make it happen.

•Civil Strife Index *

Aside from Jamaica having a scary crime rate and a bloodthirsty police force, the rest of the region takes pains to keep visitors and banks safe, which is all that counts for our FTAA people.

•Reefer Quality Index*****

Irie, mon.

•Foreign Debt Index $9 billion

The Caribbean islands are small-time players, even pawns in international politics -- as the discontinuation of preferential trade agreements with the EU proves. The FTAA will only increase their monkey-in-the-middle status as their ability to repay debts relies on their ability to trade.

•Trade Power Index *

•Corruption Index ****

Bribery at the lower levels of government plagues the Caribbean, but even more damaging is the uncontrolled misappropriation of public funds in a part of the world where services are rare and greatly needed.

Central America

Yankee capitalists hope traditionally cash-starved Central American countries Guatemala, Honduras, Nicaragua, and El Salvador will help them establish a blueprint for the FTAA. Earlier this year the four nations agreed to negotiate -- along with Costa Rica, their prosperous and peaceful neighbor to the south -- a free-trade pact with the U.S. known as CAFTA, the Central American Free Trade Agreement, with NAFTA serving as the template. Negotiations are expected to conclude this coming January. (Panama, long a U.S. whipping boy, has been excluded from CAFTA. So has tiny Belize, presumably because U.S. trade officials can't find it on a map.) Certainly the Central American countries are no strangers to the advantages and disadvantages of trade with the United States, for years having provided cheap manufacturing labor -- mainly in textiles -- to U.S. companies. Despite decades of rampant poverty, institutionalized government corruption, and bloody internal conflicts, the region's 36 million people account for nearly $20 billion in annual trade with the United States.

•Civil Strife Index***

High crime rates and increasing instability owing to drug trafficking portend an ominous future.

•Life Expectancy 67 years

•Reefer Quality Index***

•Literacy Rate 72%

•Foreign Debt Index $12 billion

Still struggling from the destruction of Hurricane Mitch, these countries are dumping nearly half of their budgets into servicing debt, which appears to be an endless cyclone itself.

•Trade Power Index *

•Poverty Rate64%

•Corruption Index ****

Inefficient bureaucracies make a back-door approach necessary in countries where bribery is a way of life.

Chile

Why can't every country be like Chile? United States trade reps have designated this nation of 15 million as a "model" economy. Augusto Pinochet's brutal dictatorship permanently shut down radical labor and silenced indigenous malcontents. The transition to democracy in the early Nineties ushered in meteoric economic growth of more than 25 percent per year. By now the growth has slowed to a more modest three or four percent, but this small and well-managed economy -- running mostly on copper, grapes, and wood pulp -- remains free-trade friendly. Local and foreign companies are taxed at the same rate, and very relaxed investment laws allow foreigners to take their earnings back to their home countries without much hassle. There were a few tense moments early this year when Chile refused to back the U.S. war in Iraq, but the old friends kissed and made up with a bilateral trade agreement this past June (signed here at Miami's own Vizcaya) that the United States hopes will serve as a building block for the FTAA. That agreement has Brazilians crying foul. Chile is a member of the South American common market known as Mercosur, which is pushing its own FTAA agenda to counter U.S. influence. That leaves Chile in the very delicate position of trying to please two powerful trading partners.

•Civil Strife Index *

Nearly twenty years of Pinochet left the country with little punch and even less organization.

•Life Expectancy 75 years

•Reefer Quality Index1/2

•Literacy Rate 96%

•Foreign Debt Index $98 billion

Chile currently stands alone among its Southern Cone neighbors as a solvent and reliable economy. The long-term outlook is good, foreign debt being the turtle in the race against the hare.

•Trade Power Index ****

•Poverty Rate 20%

•Corruption Index **

Two decades of brutal dictatorship gets you a mess of war crimes and a fairly efficient government bureaucracy.

Colombia

In Colombia they have a saying: "Es complicado pero no es complejo." Loosely translated: I have no idea what's going on here. This country probably has the world's strangest mix of war, politics, and economics. During some of the worst years of political violence, Colombia's GDP was higher than European stepchildren Chile and Argentina. Only recently has the war-equals-economic-growth model faltered. After years of export controls, coffee prices have bottomed out, largely owing to an increase in Vietnamese coffee exports. Free trade may only exacerbate the situation. And the promise of an oil boom is about as likely as peace. There's much less black gold than previously thought, and the rebels and paramilitary groups have taken their battles to the country's largest cities. What's left is an economy propped up on the wheels of its strongest crop, coca, and its most lucrative industry, kidnapping -- two subjects Colombian officials will be avoiding at the FTAA meeting even while they tout the benefits of free trade for the country so their fresh-flower and coal markets can continue to flourish.

•Civil Strife Index *****

One of the most popular men in the country, Carlos Castaño, has slaughtered hundreds of unarmed people. What more need be said?

•Life Expectancy 71 years

•Reefer Quality Index****

•Literacy Rate 92%

•Foreign Debt Index $58 billion

Outsiders tend to forget about the endless civil war when concentrating on coffee and cocaine, but the government certainly hasn't. Three years ago Colombia's foreign debt was 40 percent of its GDP, second only to Argentina. Today it's even worse.

•Trade Power Index **

•Poverty Rate 55%

•Corruption Index ****1/2

Civil war and powerful drug cartels have undermined and corrupted most aspects of Colombia's legitimate government.

Costa Rica

People unfamiliar with Costa Rica, roughly the size of West Virginia, often mistakenly lump it together with its poverty-stricken, strife-torn Central American neighbors. Nothing could be further from the truth, which is why it must be considered on its own. Costa Rica is an oasis of stability and peace in the region. The country has not fielded armed forces since 1949, when the army was abolished. Its system of national parks and biological preserves, which protect a vast array of exotic flora and fauna, has spawned an ecotourism industry that has become so popular (and profitable) that some fear it may soon overwhelm the fragile landscape. Costa Rica is the U.S.'s 38th largest export market, with $2.4 billion in goods entering the country annually. American trade negotiators are hoping their good business relationship with Costa Rica will provide credibility to the FTAA.

•Civil Strife Index *

Anybody up for a hike through the rain forest?

•Life Expectancy 76 years

•Reefer Quality Index**

•Literacy Rate 96%

•Foreign Debt Index $3 billion

Thanks to tourism, the economy here has remained on track, though overall GDP has dipped in recent years.

•Trade Power Index *

•Poverty Rate 22%

•Corruption Index ***

Costa Rica has less everyday corruption than its neighbors, but scandals over misused campaign funds have plagued the upper tiers of government in recent years. Wide-open immigration policies have allowed in some bad actors who will pay to play.

Cuba

Were it not for domestic political considerations (read: el exilio), U.S. business interests would prevail in allowing Cuba to participate in the FTAA. Doing so, of course, would mean ending the embargo, which the Bush administration won't consider -- at least not until after next year's presidential election. If itchy U.S. capitalists are patient, that may well occur, in which case a sizable market for U.S. goods and services will open wide. And in turn, Cuba's biomedical-research industry might have a chance to flourish, providing much-needed competition for rapacious U.S. pharmaceutical companies.

•Civil Strife Index *

A safe place to do business, but conflict looms when el barbudo croaks.

•Reefer Quality Index

Transshipment only.

•Literacy Rate 100% (if you believe Fidel)

•Foreign Debt Index $100 billion

Though major international lending institutions (and of course the U.S.) have kept their distance from Castro, that hasn't stopped the EU, other Latin American nations, and Russia from opening their pocketbooks, despite a very bad payback history.

•Trade Power Index **

•Poverty Rate 0% (if you believe Fidel)

•Corruption Index **1/2

It's difficult to monitor corruption in Castro's Cuba, but most accounts say he runs a tighter ship than many of his Caribbean neighbors.

Haiti

As the least-developed country in the Western Hemisphere, Haiti has nothing to lose and everything to gain from a free-trade pact. At its peak in the mid-Eighties, Haiti's assembly sector employed about 80,000 people and counted the U.S. as its biggest customer by far. Among other notable products, Haitian workers wrapped and stitched millions of baseballs, including those used by the major leagues. But as infrastructure devolved into roving packs of gunmen, foreign investment fled the island along with boatloads of natives. Even with the FTAA, companies are unlikely to reinvest until some measure of political stability returns -- and what will foster that is anyone's guess.

•Civil Strife Index ****

When will Aristide's corrupt government fall? It's only a matter of time. The real question is, who or what will take its place?

•Life Expectancy51 years (est.)

•Reefer Quality Index

Transshipment only.

•Literacy Rate 49% (est.)

•Foreign Debt Index $1 billion

Kiss it goodbye.

•Trade Power Index**

•Poverty Rate 73% (est.)

•Corruption Index ******

Corruption is a different animal in Haiti, where there is almost no governmental infrastructure left to manipulate. Humanitarian aid -- from other governments, the World Bank, or nongovernmental organizations -- generally winds up in the coffers of whoever has the guns and manpower to keep it. Businessmen and travelers wishing to remain safe are wise to pay up.

Mexico

In 1994 Mexico, Canada, and the United States created the North American Free Trade Agreement (NAFTA), which now serves as a model for the proposed Free Trade Area of the Americas. So far it appears NAFTA has bolstered the profit margins of large U.S. companies while doing virtually nothing beneficial for the average Mexican. Since the implementation of NAFTA, American corporations have opened nearly 3000 factories (maquiladoras) where more than 1.3 million Mexicans, mostly young women, earn wages that average 50 cents per hour and provide no benefits. Meanwhile the cost of living in Mexico has steadily risen, along with environmental degradation. In addition, independent farmers and small companies have lost ground trying to compete with NAFTA-induced corporate consolidations. By some estimates, 1.4 million Mexican jobs have been lost in the past nine years as a result of NAFTA. Yet Mexico's president, Vicente Fox, a former Coca-Cola executive, is championing the FTAA.

•Civil Strife Index ***

Mexico is beginning to experience levels of drug violence and corruption comparable to Colombia in the late Eighties.

•Life Expectancy 72 years

•Reefer Quality Index*****

•Literacy Rate 91%

•Foreign Debt Index $341 billion

Our southern neighbor feels the ups and downs of our own economic cycles, meaning that within Latin America it's relatively steady and strong. Once the U.S. economy picks up, president Vicente Fox will be in a better position to attend to the debt.

•Trade Power Index **

•Poverty Rate 42%

•Corruption Index ***1/2

Narcotraficantes control huge amounts of money in a country where dinero is scarce. It's no wonder police and politicians are on the take from Tijuana to Tapachula.

Panama

If you want to understand the Free Trade Area of the Americas circa 2003, you might look back exactly 100 years, when Teddy Roosevelt effectively annexed this area (roughly the size of South Carolina) so the U.S. could control shipping throughout the hemisphere. (Oh, yes, and Panama "won" its independence from Colombia.) Over the ensuing century, Panama has been little more than a U.S. guard dog, banking center, and zona franca. Even after the U.S. handed over administrative control of the canal at the end of 1999, this country (with a population of three million, just a little larger than Miami-Dade County) plays but a minor role in regional affairs, despite hosting several FTAA meetings. With Manuel "Pineapple Face" Noriega in a Miami federal lockup, Panamanians need few reminders of what will happen if they get out of line.

•Civil Strife Index **

A volatile place under very close watch. (See "Pineapple Face.")

•Life Expectancy 74 years

•Reefer Quality Index****

•Literacy Rate 92%

•Foreign Debt Index $6 billion

A debt-restructuring agreement with the IMF, signed in 1996, suggested that Panama was determined to reduce its debt, but seven years later there's been no decrease whatsoever in the numbers.

•Trade Power Index **

•Poverty Rate 31%

•Corruption Index ****

Graft and general corruption among political and business elites threaten democracy in a country that already has one of the most unequal distributions of income in the hemisphere. Panama's large banking sector has been cited for numerous instances of industrial-strength money-laundering by drug cartels and other criminal enterprises.

United States

Poor United States -- so far from God, so close to Brazilian citrus groves. While comparing the U.S. economy with any other in the hemisphere is like comparing oranges with space stations (its GDP of about $10 trillion is more than all the other countries combined), the 800-pound gorilla is nervous about agriculture. So nervous, in fact, that talks over removing our own agricultural subsidies, as Brazil is demanding, could sink the whole proverbial trading ship, which we're supposedly piloting. With a highly skilled labor force of about 142 million, a whopping per capita GDP of $37,000 (Brazil's is $7600), the largest and most technically advanced economy in the world, and complete dominance of the stock market, to name just a few advantages, the U.S. has overwhelming negotiating power. In the past it has used this might in trade talks to press for openness, openness, and more openness. Most of the provisions in the FTAA will help this country's huge multinational companies, which utterly dominate the hemispheric marketplace. Beefing up legal systems and intellectual property rights, loosening barriers to privatization, and boosting transparency will be a win-win for those corporations. But most likely U.S. agriculture will lose. Only about two percent of the U.S. economy belongs to agriculture, yet certain key farm states, plus Big Sugar and Big Citrus, are part of that percentage. And yes, the last two sit in our own, politically critical state. Who knew a pound of oranges could be so heavy?

•Civil Strife Index *

Why? Because any terrorist attack on U.S. soil will send the world's economy tumbling again.

•Life Expectancy77 years

•Reefer Quality Index*****

•Literacy Rate 97%

•Foreign Debt Index

Officially the United States is in the clear when it comes to formal external debt, but huge trade deficits in some areas (China, Japan) and skyrocketing budget deficits at home (the likes of which the World Bank and IMF would never tolerate in client countries) are major causes for concern.

•Trade Power Index *******

•Poverty Rate 13%

•Corruption Index *1/2

The trains run on time (usually), public officials on the take wind up in jail (sometimes), and you don't have to slip the guy at the post office a $20 bill to get your package before next month.

Venezuela

Embattled president Hugo Chavez has called the FTAA "a perverse mechanism that would be a death order for the future of the region." Chavez was the only signatory to the original FTAA draft agreement who put an asterisk next to his name. His opposition to the FTAA is conditional (Chavez believes South American nations should form trade blocs to wield greater negotiating power at FTAA talks), but important given Venezuela's status as a founding member of OPEC -- whose edicts could be trumped by FTAA rules -- and the fourth-leading supplier of oil to the U.S. He knows the U.S. needs his oil as much as his country needs our trade. The U.S. is Venezuela's leading trade partner, and in a show of the left-leaning president's tendency to act the gadfly, Venezuela has become Cuba's leading trade partner under Chavez's rule. The resource-rich country (fifth-largest oil exporter in the world) does about half its petroleum business outside the Western Hemisphere but needs more private investment in the telecommunications and power-generation sectors to weather the ebb and flow of the oil market. If Chavez survives his ongoing struggle with the Venezuelan upper classes, and continues to believe that the FTAA is too biased toward U.S. corporations, this country could be a powerful opponent to the FTAA.

•Civil Strife Index ***

Despite the unrest and talk of guns and so on, there's something about Venezuelans that keeps them from seriously duking it out -- for now, at least.

•Life Expectancy 73%

•Reefer Quality Index***

•Literacy Rate 92%

•Foreign Debt Index $89 billion

Is Chavez serious about tackling this debt? Some observers see signs that he is, but all signs from Caracas are subject to change at any moment.

•Trade Power Index **

•Poverty Rate49%

•Corruption Index ****1/2

Hugo Chavez may have been elected to the Venezuelan presidency (after two failed coup attempts) but he's had to resort to strong-arm tactics to stay there. The kind of stranglehold on government that Chavez needs to remain in office isn't exactly conducive to transparent governing, nor is his increasing reliance on mobs of angry, poor Venezuelans.

Sources: Bank for International Settlement; International Monetary Fund; Latin American Network Information Center/University of Texas, Austin; Organization of Economic Cooperation and Development; Transparency International; United Nations Development Program; United Nations Economic Commission for Latin America; World Bank

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