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14 January 2014, Gateway House

Latin America: A review of 2013

With elections scheduled in seven Latin American countries, 2014 will be a year of significant political developments in the region. As we enter 2014, Gateway House examines the important events that defined Latin American politics and economy in 2013

Former Distinguished Fellow, India-Latin America

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The manifestation of people’s power, expressed through protest movements in Brazil and other countries in the region in 2013, have given a clear message to political leaders:  become more responsive to the aspirations of the people and be more accountable. We can expect the empowered Latin American middle class to continue with protests from time to time to rein in political leaders and ensure that they deliver good governance.

Drug trafficking, crime and violence continue to be major challenges in Latin America. Mexico and Central America have suffered the most from drug trafficking, and the region’s homicide rate has increased by 11% over the last decade.

The Colombia-Nicaragua maritime dispute flared up in 2013 due to Colombia’s refusal to accept the verdict of the 2012 International Court of Justice, which gave a larger part of the disputed area to Nicaragua. This problem has the potential to create tensions in 2014 because the two countries have taken rigid stands.

The Colombian government’s negotiations with the FARC guerrilla group have made some progress, giving rise to optimism that the negotiations will conclude in 2014. The retreat of the guerrillas has opened new business opportunities for oil and gas exploration, as well as mining and agricultural production in the areas previously controlled by the rebels.

Regional integration did not significantly progress in 2013. The Mercosur trading bloc remained paralysed due to political issues set off by Paraguay’s suspension from, and Venezuela’s inclusion into, the bloc. Paraguay has now accepted Venezuela’s membership to Mercosur, and both countries have restored diplomatic relations.

Argentina’s import restrictions and Brazil’s protectionism continue to impede Mercosur’s further integration and external openings. The Union of South American Nations (UNASUR) also remained dormant in 2013. The Andean Community and the Central American regional group SICA did not move towards further integration in 2013.

On the other hand, the Pacific Alliance has deepened its integration and is reaching out to other countries in the region as well as outside. The year 2013 marked the 20th anniversary of the North American Free Trade Agreement (NAFTA), but saw no grand celebrations since the U.S.’s trade focus is now on the Trans-Pacific and Trans-Atlantic partnerships.

Mexico, Chile and Peru are participating in the Trans-Pacific Partnership (TPP) negotiations. Colombia and Costa Rica have expressed an interest in membership of the TPP. There have, however, been calls from trade and industry organisations of the three NAFTA members – U.S., Mexico and Canada – to move towards a NAFTA-II. Thanks mainly to rising Chinese wages, Mexico has regained its manufacturing competitiveness and increased its global exports.

Despite the absence of significant forward movement in regional integration, intra-regional and intra-subregional trade has been steadily increasing over the years. Intra-Latin American trade makes up about 20% of the region’s total global trade.

Anti-U.S. sentiments revived in the region after a forced landing of the aircraft of Bolivian President Evo Morales and Edward Snowden’s revelations of U.S. spying on Brazil and Mexico, amongst other countries. Brazil took the lead in raising the issue of U.S. spying at the UN, and is convening a global summit in April 2014 on internet security. In addition, Brazil’s President Dilma Rousseff cancelled her state visit to the U.S., scheduled in October, as a show of displeasure.

China continued to strengthen its trade and investment partnership with the region. It participated with a large delegation in the sixth China-Latin American and Caribbean Business Summit in Costa Rica in November. China is expected to overtake Europe as the second largest trading partner of Latin America by 2016. Chinese exports to Latin America are already more than those of Europe.

The EU-Central America Association Agreement signed in 2012 became fully effective from December 2013 with the ratification by the parliaments of all the Central American countries. The EU-Mercosur trade negotiations have been postponed mainly due to Argentina’s restrictive import policies. Latin American exports to Europe have gone down due to the debt crisis and other economic problems in Europe.

Most importantly, 2014 will see elections in seven Latin American countries: Costa Rica and El Salvador in February; Panama and Colombia in May; Brazil and Uruguay in October; and Bolivia in December. In the two major countries, namely Brazil and Colombia, the incumbents are expected to be re-elected.

The biggest event of the year, however, will be the football World Cup in June-July in Brazil, the land of the “beautiful game.”

Ambassador Viswanathan is Distinguished Fellow, Latin America Studies, Gateway House. He is the former Indian Ambassador to Argentina, Uruguay, Paraguay and Venezuela, and Consul General in Sao Paulo.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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