Review of Salvador Rivera's book "Latin American Unification – a history of political and economic integration efforts"

Latin America is catching up with the global trend of regional integration by forming regional and subregional economic groups. Critics point out the flaws in these integration schemes and the failed attempts in the past. In this context, Salvador Rivera, a professor at the State University of New York, has given in his book a historical background of the intellectual and political movements for unification of Latin America over the last two centuries. Rivera has done exhaustive research and has brought out fascinating details of the evolution and the personalities who championed the cause of integration. Rivera's book is the first comprehensive one in English on the subject.

According to Rivera, the unification process has evolved through four major stages. The first one was marked by the role of diplomats in the 1820s, the second by idealists in the 1860s, the third by technocrats in the 1950s and the fourth stage since the 1980s being driven by political leaders. He stresses that Latin Americans were the first ' third world' people to recognize the need and move towards regional integration. 

Simon Bolivar laid the foundation for Latin American integration with his vision and practical initiative. He convened the Panama Congress in 1826 in which diplomats from several countries negotiated and concluded a Treaty of Union, League and Perpetual Confederation, signed on 15 July 1826. This Treaty with 31 articles is an extraordinary achievement. It had focussed more on the political matters and left the trade issues for consideration in the next congress to be convened in Tacubaya, Mexico. But the Treaty was far too ahead for its times. The newly independent countries had too many teething problems and failed to ratify the Treaty. Later Mexican, Ecuadorian and Peruvian governments had taken similar integration initiatives. The Peruvian endeavor  lead to signing of the Treaty of Confederation in 1848, which also met with the same fate as the previous one. 

In the second stage, some idealists and intellectuals from Colombia, Peru, Chile, Argentina and Uruguay among other countries advocated regional integration through publication of articles, books and formation of organizations such as Sociedad de la Union Americana. 

In the third stage, technocrats like Raul Prebisch succeeded in the creation of the Latin American Free Trade Association (LAFTA) in 1960, which was a milestone. But it got lost in the political disruptions caused by military coups and divisive Cold War politics. In 1980, LAFTA was expanded and changed into Latin American Integration Association ( ALADI) which remains as an expression of intent without any serious action so far.

Rivera blames the" political class" which held power in the different countries for the failure of integration efforts. However the same political class, but this time representing the masses in the post-dicatorship period starting in the 1980s, had taken initiatives and formed MERCOSUR, UNASUR and CELAC which mark the fourth stage.  

Regional integration in other parts of the world have been motivated by perceptions of common external threats and competition for markets. Latin America is no exception to this trend. In the beginning, the newly independent countries of Latin America came together to deal with the potential threat from Spain and Europe.This was followed by the Spanish –speaking republics fearing the Brazilian monarchy as a threat with extra territorial interests. Later, USA emerged as a real threat after its annexation of Mexican territories, snatching of Panama from Colombia and the destabilization of the region by US support to rightwing military dictatorships. The Latin Americans are conscious that the threat from US will continue in future too in one form or another and that the only way to face it is through collective strength. 

The author has described the defeat of FTAA ( Free Trade Area of the Americas) as a significant moment in the history of the region. I would even go further and say that it was a defining moment for Latin America. For the first time, the Latin Americans got together and had the courage to say no to a US proposal and kill it decisively. This is a triumph of Latin Americanism over the US vision of Pan Americanism in which US would dominate as the hegemon.

The author is critical of the bilateral FTAs signed by some countries with US as undermining the unionist movement. While this is certainly part of the divide and rule US policy, one has to recognize the fact that US continues to be the top trading partner and investor for those countries. In fact, those Latin American countries which have signed FTA with US have also done the same with European Union too, besides a number of other countries. The FTA with US need not be a major obstacle to their integration within the region. For example Chile, Peru, Colombia and Mexico who have signed individual FTAs with US have recently formed Pacific Alliance. The Central American countries which have signed a collective FTA with US are already integrating their economies together in SICA, the Central American Integration System. 

Ironically, Brazil, which was seen as a threat by Latin American unionists and therefore not included in the first stage of unification, has been wholeheartedly participating and leading in the fourth stage of integration. It was the pragmatic and visionary Brazilian leader Lula who played a critical role in the formation of CELAC and UNASUR while Chavez, the self-proclaimed heir of Bolivar had divided the region with his radical and quixotic Bolivarianism. 

Those who follow Latin American integration are watching closely the rivalry between Mercosur and the Pacific Alliance. For the moment, it is the Pacific Alliance which is catching headlines as a shining example of integration, open trade and growing economies as against Mercosur mired in trade-restrictive and protective regimes. It is heartening to see the initiative of President Michelle Bachelet of Chile to bring together the two rival alliances towards integration. It is a long shot but it is in the right direction.

The author has concluded with an optimistic note that " we may very well see in our time" a more unified Latin America. He has advocated that the unionists need to enlist the support of all the stake holders including especially the young people. 

Rivera has not covered in his book the evolution of sub regional groups except for MERCOSUR since his focus was on the larger continental unification. Let us hope that Rivera will write another book on the sub regional integration, with his vast knowledge of the larger picture.

Rivera has shown exceptional objectivity and fairness in narrating and analyzing the history of Latin American integration, free from the usual American bias and prejudice. In fact, he has shown understanding and sympathy for integration as something good for the prosperity of Latin America which he believes is good for US too. But the State Department has to change their mindset and learn to live with an integrating Latin America which is becoming  more assertive and autonomous in foreign policy.

Will Latin America become like a European Union? Perhaps not in the near future. There are many more challenges. But there is no doubt that every country in the region, big or small, has realized the importance of collective strength and the benefits of regional integration. This realization will be the key driver which will move the integration forward in future.

Rivera's book is a must read for those who follow the ongoing the process of Latin American integration to get a historical perspective.

Ten-Point Latin America Agenda for the New Government

Economic Diplomacy should be the focus with Latin America. India's trade of 42 billion dollars in 2013 could reach 100 billion in the next four years. Latin America has the potential to contribute to India's energy and food security in the long term. There are synergies and complementarities between the post-reform India and Latin America which has undergone a paradigm shift in the last two decades achieving democratic stability and economic growth. The Latin Americans have become assertive in foreign policy with firm belief in multipolar world and multilateralism. This makes them as ideal partners for Modi's agenda to enhance India's global profile and role.

1 India should sign FTAs ( Free Trade Agreement) with Mexico, Colombia and Peru, the second, third and fourth largest destinations (4 bn $ together) of India's exports in Latin America. The Indian exports are at a disadvantage in these markets which have FTAs with many countries whose exports enter duty-free. India should also deepen and widen the PTAs ( Preferential Trade Agreement) with Chile and Mercosur and consider upgrading them to FTAs.

2  India should become member of the Inter American Development Bank, which is a major financier ( 14 billion dollars in 2013)of developmental projects in the region.This will enable Indian companies to qualify for participation in the IADB projects which in turn will open up more opportunities for Indian business. China and South Korea have already joined IADB. 

3 The Eximbank of India has extended a number of commercial Lines of Credit to Latin America but many of them remain unutilised. The Bank should be asked to review the policies and make more credits which are implementable. The government should also increase its concessional Lines of Credit to the region and think of an annual target of 200 million dollars for Latin America to start with.The Chinese have given an estimated 102 billion dollars of credit to Latin America in the period 2005-13.

4 Air India should be asked to start a service to Sao Paulo through Johannesbourg to facilitate connectivity with South America. This route is commercially viable, given the growing trade and tourism between India and South America as well as in the South America- Africa and India-South Africa sectors. At present only South African Airlines operates this route as a monopoly but with inadequate service. Making use of the indifference and lack of vision of the airlines of the great emerging powers of Brazil and India, even Ethiopian Airlines makes money by connecting Sao Paulo with Delhi, besides the Gulf carriers. The Mumbai-Johannesbourg-Sao Paulo is not just another air route. It is a strategic commercial and political corridor of IBSA and a tricontinental South-South connection.

5 Brazil is a global pioneer and successful role model in the use of ethanol as fuel and has cut down its petrol consumption one third. India needs to learn from Brazil's experience to reduce its huge oil import bill, save foreign exchange, put more money in the pockets of farmers and help the diversification of sugar industry. More importantly, ethanol is much less polluting than petrol. FICCI has a proposal to organize a seminar inviting all the stake holders namely the car manufacturers, oil companies, sugar mills and agricultural sector besides the Brazilians to share their experience. The government of India should support and use this conference to unveil a new fuel ethanol policy as part of India's strategic energy security.

6 India should hold the annual Latin America Business Summits in a bigger scale, with more government support, as the Chinese do. This year FICCI is holding the summit on 16-17 October. The government could invite one of the Latin American Presidents as chief guest to elevate the profile of the event. The pro-business Mexican President Nieto would be an ideal choice.

7 Argentina and Brazil  are leaders in agricultural research and best practices such as No-Till cultivation, Silo Bag Storage system, tropicalisation of temperate crops and precision farming. India needs to step up cooperation and learn from them. Indian edible oil and pulses companies can be encouraged to invest in Argentine and Brazilian agribusiness companies and form joint ventures so that India can have direct access to the producers.This is important since India has been importing ever more edible oil and pulses to meet the growing domestic demand.

8 There is need for more exchanges of visits with Latin America. The Presidents of  Mexico, Peru and Bolivia could be invited to visit India in 2014-15. It is important to invite the Bolivian President Evo Morales, the first native Indian elected as President in the history of Latin America. During her visit to the UN General Assembly session in September, the new Indian External Affairs Minister could have meetings with the Troika of foreign ministers of CELAC (Latin American and Caribbean Community of States), foreign ministers of Mercosur, Pacific Alliance as well as SICA (Central American Integration System) and reinvigorate the dialogue and cooperation. 

9 New embassies should be opened in Ecuador, Bolivia and Dominican Republic which are medium size countries with sizable market and of sufficient economic interest to India.

10 IBSA (India,Brazil and South Africa) has been inactive in recent years. The main reason is the Chinese mischief of including South Africa in BRIC and making it overshadow IBSA. Prime Minister Modi should reactivate IBSA which is a fascinating partnership of the three members who are role models of democracies in the three continents.

Latin American interest in Modi and Gujarat

The Latin American ambassadors in Delhi are following the 2014 elections more avidly than ever in the past. There is a reason for their unusual interest this time. They have been  visiting different states of India and seeking meetings with chief ministers to promote relations with their region. Only two chief ministers had agreed to meet them, Didi and Modi. The ambassadors were doubly happy with Modi since he received them twice for meetings; first in Gandhi Nagar in 2012 and the second time in Delhi in 2013. Modi had shown keen interest in educating himself about the region, listened attentively and asked the ambassadors for their suggestions to strengthen relations. So the Latin American Ambassadors expect more attention to their region if Modi comes to power. 

The Latin Americans recall that it was the the NDA government in 1998-2004 which had taken a number of unprecedented initiatives to engage Latin America, which did not receive adequate Indian attention in the past. It was when Yashwant Sinha was the External Affairs Minister of India that IBSA was formed, PTA with Mercosur and agreements with the regional groups of Andean Community and Central America were signed. While the UPA government had certainly expanded the relations with Latin America, there were two specific problems. Natwar Singh, who was External Affairs Minister in the period 2004-5 refused to make any visit to the region on the plea that the journey was too strenuous for his age. The UPA II made the mistake of making E. Ahmed as the Minister of State in charge of Latin America in 2012-14. This was simply a disaster. He had shown the least interest in Latin America since Gulf consumed most of his attention. He also took the excuse that the journey to Latin America was too tedious for him. The Latin American ambassadors hope that the next government will give the charge of the region to a young and energetic Minister of State.

Modi has got attention of the Latin American media too. A senior and serious Brazilian journalist Patricia Campos de Mello (author of a book on India) has come to cover this election. This is the first time that a Latin American reporter is covering the Indian elections. Some Latin American commentators have made positive mention about Modi and the "economically vibrant" state of Gujarat.

Gujarat has become the most important state of India in Indo-Latin American business, accounting for over sixty percent of of India's trade with Latin America. In 2013, the Jamnagar refineries of Reliance and Essar imported 22 billion dollars of Latin American crude oil and exported 3.3 billion dollars of diesel to Brazil. This is significant considering the fact that the total Indo-Latin American trade in 2013 was 41 billion dollars, with imports of 28 billion and exports of 13 billions. The crude oil came from Venezuela, Mexico, Brazil, Colombia and Ecuador. 

Jamnagar's imports of Latin American crude is likely to increase in the future, given India's growing need for imports of crude oil. At the same time, the Latin American oil exporters are keen to supply more to India since their exports to US, their traditional main market, is reducing imports thanks to the growing self sufficiency after the fracking revolution in production of shale oil and gas. 

Gujarati businessman Adani is a well known figure in Argentine and Brazilian agribusiness circles. Adanis import edible oil ( sunflower and soya oils) from Argentina and Brazil. Edible oil is the third largest import of India from Latin America, amounting to a billion dollars in 2013. This is going to increase in the future, given the growing imports of edible oil with the increasing population and consumption. Besides edible oil, the Adanis are also importing coal from Colombia. 

Gustavo Grobocopatel, President of Los Grobo business group of Argentina says with a mischievous smile," I am a distant relative of Sardar Patel and I will vote for Narendra Modi, if I am allowed to vote". This is Grobocopatel's joke these days when Indian businessmen ask him curiously about the "patel" in his name. He is an Argentine of East European origin and has no family connection to either Gujarat or India. Grobocopatel, known as the King of Soya in Argentina, cultivates 270,000 hectares of land in Argentina, Brazil, Uruguay, Paraguay and Bolivia and is interested in export of edible oil and pulses to India as well as forming joint ventures with Indian companies in agribusiness.

Latin American distributors of agrochemicals are familiar with the exquisite embroideries of Kutch in Gujarat, gifted to them proudly by the Shroff brothers ( Jai and Vikram) of UPL, during their visits to the region. The Shroffs are of Kutchi origin. UPL is one of the largest investors in Latin America with agrochemical manufacturing and seeds business in Brazil, Argentina and Colombia with annual turnover of more than 500 million dollars. 

Chemicals and pharmaceuticals are the largest segment of India's exports to Latin America. Gujarat accounts for a sizable share of these exports, besides in the exports of engineering items and other products to Latin America.

Even if Modi does not become Prime Minister, Gujarat and its entrepreneurs will continue to lead and grow India's business with Latin America which has the potential to contribute to India's energy and food security besides offering significant scope for trade and investment.

Protests in Venezuela

The protests in Venezuela in the last three weeks have escalated to violence and face off between security forces and protestors causing the death of six protestors including a beauty queen. The protesters have demanded the resignation of President Maduro on the issues of uncontrolled crime and violence, shortage of essential items in supermarkets and the repression of opposition parties. The government accuses the opposition of conspiracy to foment instability through the riots and has detained a number of protestors including a politician Leopoldo Lopez.

The protests have now assumed external dimensions. The Venezuelan government expelled three US diplomats accusing them of conspiracy with the opposition. They have revoked the press credentials of CNN journalists and have removed a Colombian Channel NTN 24 from Venezuelan cable system for biased coverage. While right wing US legislators and leaders from Latin America have made statements expressing sympathy with the protestors, the leftist governments of Latin America including Brazil and Argentina have reiterated their solidarity with the Venezuelan government.

The protests by themselves are just a minor political headache for the government and are controllable at the moment. What the government has not been able to control are the deterioarating economic situation and the spiralling of every day crime and violence.  Venezuela has the highest inflation in the world with fifty eight percent in 2013. The Leftist government has crippled the productive capacity of the private sector ruining the industry and business. The inefficient state control of distribution and imports have converted Venezuela into a Cuba with long queues in front of super markets with empty shelves and acute shortage of essential items. Despite the very large annual oil export earnings of over 80 billion dollars, there is a severe shortage of foreign exchange reserves. The government has imposed draconian restrictions on foreign exchange, imports and foreign travel and these have given rise to a rampant black market and corruption. Caracas has become one of the most dangerous cities in the world where criminal gangs kidnap even diplomats for ransom. 

It seems that the Chavistas do not have the the capacity to solve the current problems, some of which were created by themselves over the years. They survive by handing out freebies to the poor people who are their captive voters. The only hope for Venezuela is a change from the Chavista regime. But that change has to come constitutionally and democratically and the opposition needs to be patient. They need to seek support from the poor masses, who are obliged to the Chavistas for their hand- outs. The last opposition Presidential candidate Capriles took this approach and came close to beating Maduro in the 2013 elections. If the opposition continues this strategy systematically, they have a definite hope to come to power and give hope to the country which is simply hopeless at the moment. 

The opposition is accused of having  a hidden agenda behind the protests. The opposition lead a similar series of protests in 2002 which resulted in a military coup in which Chavez was overthrown. But the military which colluded with the opposition, changed sides and brought back Chavez in 48 hours when they got left out in the distribution of spoils by the greedy opposition which grabbed the power too quickly. Chavez took his revenge on the middle class and the business which supported the coup by making their life systematically miserable since then. 

The Opposition should remember the 2002 lesson and avoid any recourse to unconstitutional regime change. The Chavistas are battle-hardened veterans in the fight with the opposition both democratically and otherwise in the last fifteen years. Armed Chavista militants pose danger to the anti-government protestors. The Venezuelan military too is enjoying undue share of power and corruption with the Chavista government and they might not side with the opposition for any coup as  they did in 2002.

Venezuela is the largest trading partner of India in Latin America with 14.4 billion dollars of trade in 2012. Of this 14.1 billion dollars were India's imports of crude oil. Venezuela has emerged as one of the top five sources of India's crude oil imports. Indian oil companies have invested over a billion dollars in the Venezuelan oil sector. Understandably, India follows the political developments in Venezuela closely, although there is no need for any worry at this stage.

"Peace with drugs" could be better than the failed "war on drugs" - Uruguay shows the way

Uruguay was named as " the country of the year in 2013" by the Economist magazine ( 21 december issue) for its bold and pioneering decision to become the first country in the world to legalize and regulate production, sale and consumption of cannabis. "Heroic uruguay deserves a Nobel peace prize for legalizing cannabis", wrote Guardian in its 12 December edition. 

Uruguay passed a law in December 2013 decriminalizing, legalizing and regulating the production, sale and consumption of cannabis. Under the new law, which will come into force from April 2014, consumers can grow up to six plants of marijuana and possess as many as 480 grams for personal use. The National Institute for Cannabis Regulation will provide seeds to those who want to grow and control quality and quantity of production. Marijuana clubs consisting of 15 to 45 members would be granted permission to grow up to 99 plants at a time. The users can also buy cannabis from the licensed  pharmacies. Users would have to register in a national data base which will remain strictly confidential and available only for consultation by pharmacists to enforce the 40g a month limit for each consumer. The use of marijuana is limited to Uruguayan nationals above 18 years of age. 

The government has set a price of one dollar a gram of cannabis, making the drug affordable. The government will get tax revenue from the sale of the drug.

The new Uruguayan law breaks the dangerous dependence of the drug users from the criminal drug traffickers by offering cannabis legally and letting them to grow it themselves. The stronger and more expensive drugs sold by the drug cartels, will be less appealing to consumers who will find the legitimate lighter cannabis safer and inexpensive. The drug cartels will lose consumers and profits. Since the cannabis is affordable, the consumers will indulge less in stealing and other crimes to get money for their addiction. The government will save in policing costs and get some revenue by taxation from cannabis as they do in the case of alcohol and tobacco

The Uruguayan "experiment" as President Mujica of the country put it, is timely and inevitable given the global consensus that the war on drugs is a failure and that there is a need to explore other options to deal with the issue. Despite the enormous resources used against trafficking and imprisonment of millions around the world, the consumption continues unabated. Drug trafficking vitiates the society with crime, violence and corruption while making enormous illegal profits. The clearest example is the failed policy of former President Calderon of Mexico who had made the " war on drugs" as his top priority and put the armed forces besides the police to fight the traffickers. At the end of six years of his term, the situation has gone worse with more crime and violence.

Drug trafficking is a demand-driven business especially by the huge demand from US and Europe. The current way of dealing with the supply side alone can never succeed. Solutions need to be found by recognizing the reality of consumption and demand. It is not just a law and order issue that could be solved by jails and police. Equally, it is a social welfare and public health care issue. It is this logical realization which has lead to calls legalization of the drugs  by political and civil society leaders of Latin America. In their address at the UN General Assembly session in 2013, the Presidents of Colombia, Guatemala and Costa Rica, among other Latin American presidents, called for a review of the war on drugs and look at alternative solutions to the drug issue. They have argued that the effects of drug trafficking on the society  have been worse than the drugs themselves. It is in this background that Uruguay has taken the first step. It may, however, be noted that Uruguay, being a small peaceful country, did not have a serious drug problem or dangerous trafficking cartels as in the case of Mexico or Honduras. Netherlands and the US states of Colorado and Washington have already legalized consumption. From January 2014, Colorado is legalizing even the sale of cannabis.

The demand-driven drug problem of US and Europe is in complete contrast to the supply-driven drug problem created in China by the Europeans in the seventeenth century. At that time opium consumption was illegal in  China while the Europeans had considered their trafficking as legal. The British even started and fought the Opium Wars forcing the Chinese to legalize the opium trade.

The war on drugs bears comparison to the failed policy of prohibition of alcohol in US in the period 1920-33 mandated under a constituitional amendment. The policy of prohibition did not stop consumption but created mafias who supplied the market at huge profit and vitiated the society with criminality, corruption and violence. The US had to repeal the prohibition act in 1933 recognizing the failure of the policy. What Uruguay has done is a similar recognition of the failed policy on drugs. Uruguay will now deal with drugs similar to the way in which the world is dealing with alcohol and tobacco by regulating and taxing the consumption and production. 

Latin America has been a victim of the US-lead war on drugs and has suffered more death and devastation than other regions. The US has been fighting the drug war in the Latin

American soil by forcing the Latin American armed forces and police to use destructive chemical sprays of agricultural land to eradicate coca cultivation and helicopter gunships and lethal weapons to fight the drug traffickers. This has resulted in bloodshed, destruction and disaster for Latin America. The Latino drug traffickers kill each other and civilians in order to continue to supply the US consumers. Even militant political and terrorist groups such as FARC of Colombia and Shining Path guerrillas of Peru have used drug trafficking to finance their activities. On the other hand, the drug crime is fuelled by the illegal flow of arms and dollars from US.

The worst example is

Mexico, which is being torn apart by the beheadings, assassinations and other acts of horror unleashed by the drug traffickers day in and day out. The number of people killed in the drug-related violence in Mexico ( estimated to be over 60,000 in the last six years ) should be more than the number of deaths caused by drugs in US.

Colombia almost became a failed state and drug cartels held the country to ransom for many years. S

mall countries such as

Guatemala, Honduras and El Salvador have become the the most violent countries in the world because of the drug traffickers, who use these countries as transit points

. Drug trafficking and related crimes have made many cities and countries of Latin America unsafe.

The US has pumped lot of money, resources and weapons to the armed forces and police of many Latin American countries in the name of aid for the " war on drugs". The US has militarized the issue with linkage to its defense industries and intelligence agencies. The US Drug Enforcement Agency ( DEA), which has offices in many countries and cities of Latin America is believed to continue the work of CIA in the past. It is because of this suspicion that President Evo Morales forced the US to close the DEA office in La Paz. The American pressure on the law enforcement agencies of Latin America to focus excessively on the war on drugs distorts the local law and order priorities. The US had also used drug cartels of Latin America for their dirty wars in the region including in the Contra War against Nicaragua. The US had patronized dictators such as Noriega of Panama and allowed his drug trafficking in return for his support in the Contra War. US provides arms, training and intelligence liaison to the Latin American law enforcing agencies in the name of the fight against drugs. Clearly, such US support to and linkage with Latin American armed forces is seen as politically undesirable given the history of US-inspired military coups in the region. The Honduran armed forces, which overthrew the democratically elected President Manuel Zelaya in 2009, are a large recipient of US aid for the fight against drugs.  This coup, the first in the twenty first century Latin America came as a rude shock and wake up call for the Latin American democracies which had come out of military dictatorships in the nineteen eighties. . There is, therefore, a strong suspicion in Latin America that the so called " war on drugs" by US has a broader political agenda than simple fight against drug trafficking. The US war on drugs is seen as resembling their war on communism which was used to destroy democracies and create military dictatorships in Latin America.

There is another Latin American dimension to the issue of drugs. In Bolivia, Peru and some parts of the Andean region, indigenous people chew coca leaves as part of their tradition. Coca leaves, considered as sacred, are used in religious ceremonies, similar to the use of betel leaves in the Tamil tradition in India. People in the Andean mountains chew coca leaves to prevent altitude sickness,to fight hunger and also for medicinal purposes.  But the UN Convention on Narcotics equates coca leaves with heroin and cocaine and says that" coca leaf chewing should be abolished". The Bolivian government under the indigenous president Evo Morales, who himself  comes from a coca cultivators community, has fought for the rights of his people to chew and grow as part of their tradition. When his demand was not agreed, Bolivia withdrew from the UN Convention in 2011 but has rejoined in 2013 as a party with the right to use coca leaves for traditional purposes. Peru, which has recently replaced Colombia as the largest producer of coca leaves, is also against demonisation of coca leaves.

The new drug law did not pass unanimously in the Uruguayan Congress. In the senate, the bill was passed by a narrow margin of  16 to 13 and in the lower house 50 to 49. There was lot of opposition among the political parties and even the public opinion was divided. Critics hold the view that the new law will encourage and lead to increase in consumption. Critics point out that the users of hard drugs as well as young consumers below 18 years of age will continue to go to the illegal traffickers. The International Narcotics Control Board has criticized the Uruguayan law, saying that it violates the UN treaties on drugs. But the Uruguayan President has upheld the right of his country to try a new solution for the issue and has called for the support of the world in this new policy experiment.

The world will watch closely the Uruguayan experiment. Other Latin American countries might follow the example of Uruguay. The Argentine head of the anti-narcotics agency has already called for a debate on the drugs issue in the wake of the Uruguayan initiative. The Uruguayan experiment could not only lead to a solution for the drug issue but will also free the region from the US interference on the pretext of the war on drugs.

It is, indeed commendable that the small ( population just 3.4 million) Uruguay has had the big vision and boldness to try an alternative approach to the global issue of drugs. This is not surprising, given their past tradition of being in the vanguard of many reforms. For example Uruguay declared itself as secular in 1917; In 1913 it became the first in the region to grant divorce to women who requested them. It introduced voting for women in 1927; It approved abortion in 2012 and same sex marriage in 2013.

Those upset with the initiative of Uruguay should not forget that the tiny Uruguay had caused the biggest upset in World Cup football history by winning against the colossal Brazil in 1950. Uruguay went into the final as an underdog with 3 points while the favorites Brazil with 4 points needed just a draw to win the cup. It had caused an earlier upset in the 1930 World Cup beating the other neighboring giant Argentina.

2014 holds promise of better political future and higher economic growth for Latin America

Politics of the region will be more pragmatic and less polarized  and radical in 2014 and in the coming years thanks to the end of Chavism. The death of Chavez in March 2013 is a turning point for the region which was polarized by his virulent ideological warfare in the last fourteen years. He had revived the bad old image of "Caudillos" ( strong men) of the region. He saw his country and the region as a black and white world of either followers or enemies. In the name of his confused " 21st century socialism" he was hostile to private sector business and ruined it in Venezuela. Chavez had divided Latin America with his extreme positions on regional and global issues. With his petrodollar patronage he tried to create a group across the region to follow his example.  Venezuela today is much worse politically, economically and socially than before Chavez came to power. It has the highest inflation in the region, power shortage, huge black market for foreign exchange, import controls, long queues in front of poorly supplied supermarkets, rampant corruption and the worst law and order situation. Although Chavez gave some hope to the poor people with his populist policies, he has damaged the democratic and other institutional framework of the country very severely. This has given a clear message to the other Leftists in the region that this is the path they should avoid. Fortunately, Chavez's successor Nicholas Maduro does not have the charismatic and destructive talents of Chavez. More importantly, he does not have any pretensions to lead the region. He is becoming more flexible and less confrontationist. This is the best news for Latin America.

On the other hand, the Left in the region is likely to be more inspired by the moderate and pragmatic Michelle Bachelet who has come back to power in Chile in the December 2013 elections. She has won against the candidate of the ruling right wing party without resorting to radical rhetoric or threatening capitalism. Bachelet has promised course correction in governance by more inclusive development policies. She attaches as much importance to creation of wealth as much as to distribution with her mix of balanced pro-poor and pro-market policies. Similar models are already working well in Brazil, Uruguay and Peru. This is the model which is setting the long term trend for Latin America.

Mexico has set a new paradigm in the region in democratic functioning by the Mexico Pact under which ruling and opposition political parties have worked together with consensus on fundamental reforms and vital national policies of the country. The Mexico Pact has already delivered in just one year six vital reforms which would not have been possible but for the Pact. This has inspired confidence and optimism of Mexicans about the political system and set an example to democracies around the world which suffer from divisive politics.

Uruguay has set an example to the region and the world on the drug issue by enacting a path-breaking new law decriminalizing, legalizing  and regulating the production, sale and consumption of cannabis. This is, again, a turning point for Latin America which is a victim of the US-lead " war on drugs". More countries from the region are likely to follow the example of Uruguay in future.

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 the political leaders to be more responsive to the aspirations of the people and be more accountable. The empowered middle class of the region might continue with protests from time to time to rein in the political leaders to deliver good governance.

Among the challenges being faced by the region drug trafficking, crime and violence continue to be a major concern in many countries and cities of Latin America. Mexico and Central America have suffered the worst from drug traffickers.The Colombia- Nicaragua maritime dispute flared up in 2013 due to Colombia's refusal to accept the 2012 ICJ verdict which gave a larger part of the disputed area to Nicaragua. This problem has the potential to raise some tensions in 2014 since the two countries have taken rigid stands.

The Colombian government negotiations with FARC guerrilla group has made some progress giving rise to optimism for conclusion next year. The retreat of the guerrillas has opened new business opportunities for oil and gas exploration, mining and agricultural production in the areas previously controlled by them.

Regional integration did not make any significant progress in 2013. Mercosur remained paralyzed due to the issues of suspension of Paraguay and inclusion of Venezuela. Paraguay has now accepted  Venezuela's membership and the two countries have restored diplomatic relations. Argentina's import restrictions and Brazil's protectionism continue to block Mercosur's further integration and external openings. UNASUR had also remained dormant in 2013. The Andean Community and the Central American regional group SICA also did not move much for 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 outsiders. 2013 marked the twentieth anniversary of NAFTA but there were no grand celebrations, since US has been focussed on Trans Pacific and Transatlantic partnerships. There have been calls from trade and industry organizations of the three members to move towards a NAFTA II. Thanks mainly to the rising Chinese wages, Mexico has regained its manufacturing competitiveness and has increased its exports.  Mexico, Chile and Peru are participating in the Trans Pacific Partnership ( TPP) negotiations. Colombia and Costa Rica have expressed interest in membership of TPP.

Despite the absence of significant forward movement in regional integration, the intra-regional and intra-subregional trade have been steadily increasing over the years. Intra-Latin American trade is about 20% of the global trade of the region.

There was revival of  anti-US sentiments in the region following the forced landing of the aircraft of President Evo Morales and the Snowden revelations of US spying on Brazil and Mexico among others. Brazil took the lead in raising in the UN the issue of US spying and is convening a global summit in April 2014 on internet security. President Dilma, as a show of displeasure, canceled her state visit to US scheduled in October.

China continued to strengthen its trade and investment partnership with the region and 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 due mainly to the Argentine import restrictive policies. Latin American exports to Europe have gone down due to the debt crisis and other economic problems in Europe.

The region will have Presidential elections in seven countries: Costa Rica( February), El Salvador(February), Panama(May), Colombia(May), Brazil(October), Uruguay(October) and Bolivia( December). In the two major countries namely Brazil and Colombia, the incumbents are expected to be reelected.

The biggest show of the year in 2014 will be the World Cup football in June-July in Brazil, the land of the " beautiful game".

Mexico - the 2013 champion of reforms

"If an award could be given in 2013 for Country of the Year, Mexico might deserve it. No other country has done more this past year to put reforms in place to transform a nation – and with startling democratic consensus", wrote Christian Science Monitor on 15 December. It is a rare compliment from the American media which have been obsessed with negative portrayal of Mexico headlining issues such as drug trafficking, illegal immigration and violence. Mexico has brought about more fundamental reforms in the last twelve months than any other democratic country. 

The reforms were initiated by Enrique Penha Nieto, the young and dynamic President of Mexico since December 2012 as part of  the " Pact for Mexico"( Pacto por Mexico) signed by the four major political parties of the country committing consensual support to vital policies and reforms of national importance. He started the negotiations with the other parties as soon as he was elected in July 2012 and  signed the Pact on the second day after his inauguration. The Pact has brought together the ruling centre-left Instituitional Revolutionary Party(PRI) and the three principal opposition parties; the leftist PRD party, the Conservative  PAN ( which was ousted from power in 2012 after two terms) and the Green Party which joined the Pact in January 2013. The political parties came together for the Pact after the realization that the polarization of politics had weakened the country alarmingly especially in the last decade.

The 95- point agenda of the Pact ranges from tax overhaul to barring junk food in schools. The Pact has already helped in passing six major reforms in the last twelve months: (1) reform of the educational system (2) legal reform  (3) a telecommunications law that limits the quasi-monopolistic powers of the biggest companies including that of Carlos Slim, the world's richest man (4) a  tax reform increasing the tax for more social spending (5) Electoral reform  and (6) the energy reform.

The energy reform bill passed by the Congress on 12 December is the most dramatic and historic one, since it was considered as the most difficult to achieve. The Petroleum sector had remained as a holy cow in Mexico since the nationalization in 1938 because of the fear of  domination by the giant US firms. The inefficient monopoly of Pemex has resulted in fall in crude output by a quarter. The new law allows entry of foreign and private investment which will rejuvenate the energy sector with investment and technology. The production of oil is expected to increase by a million barrels by 2020 and energy costs for consumers and the industry will become lower.  

The energy reform of Mexico is good for India which has been importing Mexican crude oil regularly in recent years. In 2012, India imported US $ 2.83 billion worth of crude oil from Mexico. India is Mexico's third-largest market for oil after the US and Spain. As Mexico increases its production capacity, India can count on Mexico as a regular longterm source of supply in future. The reform has also opened opportunities for Indian companies to invest in the Mexican oil sector, as they have done in Venezuela, Brazil and Colombia.

 Every one of the reforms was ferociously opposed by the vested interests, unions and ideological warriors of the country. Mexico city was paralyzed for many weeks by the protestors in the last one year. But the government firmly stood its ground and carried the reforms through. Still, the reforms would continue to face challenges by the forces opposed to them as well as in implementation through secondary legislations. Mexico also faces serious problems of drug trafficking, crime and violence, besides high levels of poverty and inequality as well as slow growth. But what is important is that the reforms have given a new confidence to the people in the political system that it could deliver and have made them more optimistic about the future. 

The reforms have heralded a new paradigm of democratic functioning besides opening a new era of economic and social transformation for Mexico. The manner in which the the ruling party and the opposition parties have worked together and brought about so many reforms under the Mexico Pact is an example and inspiration for other democracies of Latin America and the world. The Economist magazine commended, "Mexico appears to have found the medicine for political gridlock" and commented,"plenty of Americans must have cast a jealous eye south of the border this year".  Wall Street Journal wrote, " At a time when politicians in Washington struggle to agree on anything, their Mexican counterparts sit down almost daily to talk about thorny issues".  The Mexico Pact shines even more brightly against the dark background of the US government shut down in October 2013 and the policy paralysis in Washington DC due to the irreconcilable ideological polarization and fight between the Republicans and the Democrats. The next prime minister of India could start off with a "Pact for India" by reaching out to the opposition parties and forging a consensus on some of the issues of vital national interest.

This article was published by Mint Newspaper on 27 December
http://www.livemint.com/Opinion/lZq3hZ2TJtK6D5UFIEFOnO/Mexico-holds-a-mirror-to-India.html 

Poverty and Inequality are declining in Latin America

Poverty rate has decreased signifcantly from 48.4 % in 1990  to 27.9 % in 2013 and extreme poverty has declined from 22.6%  to 11.5 % in the same period, according to a report “Social panorama of Latin America” released on 5 December by ECLAC ( Economic Commission for Latin America and Caribbean), a UN organisation based in Santiago, Chile. The other highlights of the report are:

The rate of poverty reduction has slowed down in the region in recent years due to the impact of the global financial and economic cris, the fall in commodity prices and slower domestic growth.,  The per capita GDP growth in 2012 was just 1.9% in 2012 as against 3.2% in 2011 and 4.5% in 2010.

Venezuela tops the list with the largest drop in poverty reduction. Brazil, Peru, Argentina and Ecuador have also seen significant fall in poverty. On the other hand poverty rate has gone up in Mexico.

Inequality in income has reduced in Venezuela, Brazil, Peru, Bolivia and Uruguay  while it has increased in Paraguay, Panama and Costa Rica.

Share of social spending as a percentage of GDP in 21 countries of Latin America and Caribbean has gone up from 12.5% in 1992-93 to 19.2% in 2010-11. The share of social spending as a percentage of public spending has also increased from 50 % in 1992-93 to 65.9 % in 201-11 in the same group of countries.

My comments:

The credit for the reduction in poverty and inequality in Latin America goes to the proactive poverty alleviation programmes of the Leftist governments in the region. Brazil’s Bolsa Familia is a role model for the region and for the world too.

The region needs to keep up its Leftist orientation in the coming years since even now poverty rate is substantial. The number of people living below the poverty line in Latin America is 164 million accounting for 27.9 percent of the total population. The number of people who are extremely poor in the region is 68 million representing 11.5 % of the total population.

Honduras elections

While the Chilean elections held in November have brought back to power the Left which is a role model for the region, the elections held in Honduras in the same month has returned to power the right wing National Party which colluded with the military coup and overthrow of the democratically elected President Manuel Zelaya in 2009. If Chile is an inspiration for the Twenty First Century Latin America, Honduras is a reminder of the bad old times of the last century of coups and conspiracies.

In the elections held on 24 November 2014, Juan Orlando Hernandes, of the National party has been declared as the winner by the electoral authority of Honduras. Hernandes got 36.8% of the votes while his main rival Xiomara Castro, the centre-left candidate of the Libre party got 28.8 percent. She is the wife of ex-president Manuel Zelaya who was ousted in the 2009 coup. She has alleged irregularities in the counting and has rejected the official results. She has claimed victory and her supporters have been in the streets with protest demonstrations. In response, the electoral authority has agreed to recount in some cases. But the Libre party does not agree with the way the recounting is proposed to be done by the electoral authority. So there is going to be more street protests and uncertainty for sometime. However, the chance of Xiomara winning the election after recount is very slim, given the overwhelming strength of the right wing forces including military which are opposed to the Left.

Honduras is the original " Banana Republic" and is continuing to be true to its derogatory meaning. It is the only Latin American country to have had a coup in the Twenty First Century Latin America. Manuel Zelaya, the President was ousted in a classic military coup in 2009, put in a plane and dropped in Costa Rica as an exile. This came as a total surprise and shock since the twenty first-century Latin America has transformed into a democratic region ( exception-Cuba) having sent the military back to barracks irreversibly. So this was the first and only case of coup in the region in this century. The conservative National party, supported by their US patrons was the villain behind the coup. The reason for the overthrow of Zelaya was that he was trying to seek reelection through a referendum. Such a blatant and untenable excuse! The real reason for the coup was to punish him for being close to Chavez and give a message to other pro-Chavez presidents in the region.

Honduras has the notorious distinction as the murder capital of the world with 82 murders for every 100, 000 of the population and 20 murders a day. The ruthless Mara gangs, said to have tens of thousands of members, strike terror all over the country and are involved in drug and human trafficking. President-elect Hernandez, has promised tough measures to deal with the crime by putting the military and more police in the streets.

Many Hondurans emigrate to escape the terror inside the country. 25% of the foreign exchange comes from the remittances of Hondurans who work abroad. In US alone there are over 700,000 Hondurans, almost ten percent of the total population.

Honduras is one of the poorest countries in the region. About fifty percent of the population are below poverty line. Poverty alleviation is not a priority for the conservative party which has won the election, in contrast to most other Latin American governments which have pro-poor policies and programmes. This means that there is no immediate hope for Hondurans suffering from poverty and inequality.

Honduras is the second biggest coffee producer of Central America and an important banana exporter. The country is diversifying into textiles and exporting to US taking advantage of the FTA with US.

An interesting fact: Honduras has the second largest number of people of Palestine origin( 280,000) in Latin America, after Chile (350,000). Carlos Flores Facussé, who was President of Honduras from 1998 to 2002 was a Palestine descendent.