Latin America: Summits and Crisis

Leaders of Latin American countries met last Tuesday and Wednesday for the first Latin American and Caribbean Summit on Integration and Development. Like political junkets everywhere, the leaders congregated at a resort area, this time at Costa do Sauípe in the Brazilian state of Bahia. Thirty-three countries, including Cuba, participated.

Latin American leaders hold a series of summits on various subjects throughout the year. In fact, Brazilian diplomat Marcos Azambuja expressed concern that “While the summit comes at a good time, it multiplies the already large number of integration schemes and exacerbates the proliferation of processes and summits. … Brazil is playing on too many fronts and it should simplify and concentrate its efforts.”

Like the Foro de Sao Paolo, the meeting didn’t include the US. Joshua Goodman of Bloomberg News examined the increasing influence of Russia and China in the region, especially when it comes to armaments. However, there are a number of things to bear in mind:

1. The participating countries used the forum to discuss regional issues affecting the numerous subregional blocs in Latin America and the Caribbean.

2. The region continues to meet in order to bring about bilateral free-trade agreements, a trend that has continued after the collapse of the Doha talks.

3. The region continues to be dependent on the export of natural resources, such as oil, which prices have plummeted. This was one of the issues discussed on the summit.

4. The meeting took place a day after Ecuador voluntarily defaulted on its debt. Part of that debt was contracted under the Reciprocal Payments and Credit System of the Latin American Integration Association (ALADI). Last month Brazil recalled its Ambassador to Ecuador when Ecuador said it was not going to pay $460 million owed to Brazil's national development bank, the BNDES. Relations between Brazil and Ecuador were strained also because of Ecuador’s lawsuit against Petrobras planned sale of a 40% stake in Block 18 to Inpex unit Teikoku Oil Ecuador. Ecuador dropped the suit the day the summit started.

5. Thomas Shannon, the top U.S. diplomat for Latin America, explained that

had discussed with Brazil and Mexico ways the meeting’s agenda could be used during the U.S.-backed Summit of the Americas, in April in Trinidad and Tobago.

6. Last but not least, the summit highlights the emergence of Brazil’s diplomatic leadership and influence in the region.

Mayra Pertossi, writing about the Latin American and Caribbean Summit on Integration and Development at Venezuela’s Noticias24, reports that this global financial crisis found Latin America in relatively strong shape, because of the prior boon on oil prices and commodities. However, due to the plummeting prices the region braces itself for a rough 2009. Brazil and Mexico, the region’s strongest economies, won’t remain unaffected, but Argentina, Venezuela and Ecuador will probably be the hardest hit. Argentina faces $200 million in debt due in 2009.

Pertossi states that Chile is the only economy in the region positioned to initiate countercyclical measures. Due to the boom in copper prices, which accounts for 40% of the country’s exports, the Chilean government has set aside a $21 billion special fund, which according to Chilean Interior Minister Andrés Velasco, will finance the budget for the next ten years.

Mexico’s El Universal reported that Felipe Calderón proposed the creation of a regional alliance that would exclude the US, “an OAS without the USA.” Calderón rejected the creation of a multinational force to fight organized crime and the drug trade.

Granma, the official organ of the Cuban Communist Party, also called for the creation of Organization of Latin American and Caribbean States.

France 24 highlighted Evo Morales’s ultimatum to the US demanding an end to the Cuba embargo, but

The summit's host, Brazilian President Luiz Inacio Lula da Silva, distanced himself from Morales's call.

Lula kept a more conciliatory tone and asked for “prudence and political diplomacy," and to wait until Obama is president.

The summit. while being one of many regional summits, foreshadows a number of challenges to the Obama presidency:

The demand to end the Cuban embargo;

Ecuador, Bolivia and Venezuela's stance on the war on drugs, which is tied to terrorism and crime, along with an arms buildup;

The possibility that Ecuador's default may signal a trend of defaults in the region;

And the impact of the financial downturn in Latin American economies.

In addition, Russia and China continue to increase their presence - Russian ships have landed in Cuba for the first time since the end of the Cold War.

We shall find out in April's Summit of the Americas how the Obama administration will start to face these challenges.

Fausta Wertz also blogs at faustasblog.com.