Latin America after Trump
After Donal Trump won the presidential elections in the United States, there has been a flow of jokes from Latin America. One of my favorites is this one: “Trump builds walls, vote for Chapo, he digs tunnels”. Chapo is Mexico’s most infamous druglord, who’s ever more creative methods to smuggle cocaine to the United States included digging tunnels. The joke does not only reflect the Latin Americans ability to face tragedies with a sense of humor, but also that Trump’s policy in the region may have a series of unforeseen consequences. Among the most important is that China will further strengthen its presence in the region.
Foto: Flickr Creative Commons
Uncertainty, caution and disgust have characterized Latin American media coverage of the Trump-victory. The sentiment of threat is of course most pronounced in Mexico. The much discussed border-wall towards Mexico is about to shrink to a fence (that to some extent already exists). However, if Trump is serious about breaking up NAFTA, massdeport migrants and place a 35 percent tariff on Mexican goods, it will hit the Mexican economy hard. Remittances amounted to 23 billion dollars of income to Mexico in 2015. 80 percent of Mexico’s exports is destined to the US market, and millions of jobs depend on that export. The economic transformation that is needed to find new employment to them, and the perhaps 1,5 million Mexicans that are risking being deported, will be lengthy.
Also other countries are afraid of what a Trump-victory may mean. Everyone that have hoped for a further softening of the restrictions against Cuba are now awaiting a clarification on who will “land” the Cuba-policy: and earlier “businessman-Trump” that saw economic benefits of a “normalization” of the relations to Cuba, or the later “politician-Trump” seeking support from conservative republicans and that have pledged to support the Cuban and Venezuelan peoples against their oppressive governments, and may cut off all cooperation. Nobody knows what Trump thinks about Colombia, where one now seeks to anchor a re-negotiated peace agreement in national support. (The only time the Trump-campaign mentioned Colombia, the name was misspelt Columbia). However, it is possible that he will cut economic aid promised for the implementation of the peace agreement promised by Obama. In the worst case scenario Trump finds it opportune to join forces with ultraconservative forces that rejected the first peace agreement.
However, much of Trump’s policies may have unforeseen consequences. If Trump contributes to a deterioration of the relations to Mexico, Mexico may answer with terminating the cooperation on stopping migrants from Central America on their way towards the North. Without Mexico as a buffer, migrant-flows may increase. The think-tank InsightCrime proclaimed organized crime to be among the main winners of the US elections. The United States has a close security, intelligence and police cooperation with Mexico and other Latin American countries. History has shown that to be much more important than physical hinders against ever more advanced criminal groups. The result may be both more drugs and more migrants flowing towards the north.
Yet, a more important impact might come as a result of the announced pulling out of hte Trans-Pacific Partneship and a possible high tariff on Chinese goods. With the exception of Mexico Latin America has become much less dependent on the United States the last decade and attached itself much closer to China through investments, trade and finance. China is now Latin America’s biggest lender, and the most or second most important trading partner to all the large countries in Latin America. During the APEC summit in Peru last week, the Trump effect was already noticeable even if it was Obama that represented the USA. The United States is no longer calling the shorts. It is China that is running the show. And it is not any show as the 21 member countries represent 54% of world trade ad 50% of world exports.
We can only speculate about the possible long term consequences or Latin America. To judge from history, it was precisely in the 1930s, when the world economy was in crisis and the US turned inwards, that the economic and theoretical basis for Latin Americas industrial growth period was laid. Then the strategy consisted in replacing exports by supporting inland industrialization, and increase trade internally in Latin America.
The strategy had many weaknesses, and would be difficult to conduct today as long as the Chinese mostly imports commondities (although that is about to change) and the US may make access to its market for industrial goods more difficult. However, the lesson from the 1930s is that changes in international markets, may spur creativity and regional cooperation between the Latin American countries. Today, Latin American cooperation is in a deep crisis, among other reasons due to political crises in Brazil and Venezuela. It is not unlikely that the difficulties that are facing the region, with a Trump in charge in the United States, will force Mexico to turn south and west (towards China), and strengthen regional cooperation, with China as the most important external actor. Then we have to hope – and insist – that it will be based on a common front against all the threats that democracy is facing in the western hemisphere, including the United States.
This article was first published in Norwegian in the column Internasjonalen in Dagsavisen. It is avaliable here.