Latin America’s Moment

The tragic January airplane crash that killed Justice Teori Zavascki, a member of Brazil’s highest court (the Supremo Tribunal Federal, STF), has given President Michel Temer an opportunity to seize yet another commanding position in Brasília: a potentially balance-shifting court seat. This appointment, and other machinations underway in Brasilia, could undermine the Lava Jato investigation, engender a popular backlash, and ultimately undercut the incipient reform efforts underway in Congress. Past STF nominations have not been always been overtly political. Although the Workers’ Party (PT) which governed until last year appointed eight of the eleven justices on the STF before Zavascki’s death, it chose a number of nominees who were already judges or prosecutors in their own right, and thus proved willing to rule against PT incumbents when necessary. Joaquim Barbosa, most famously, was nominated by former President Lula, but this did not temper his willingness to zealously pursue the pathbreaking mensalão corruption case against senior administration officials. Zavascki, likewise nominated by the PT, was also thought to be his own man, a career judge unwilling to bend the law to meet political exigencies. At the time of his death, Zavascki was responsible for overseeing the trial court spearheading the Lava Jato case. His propriety in that case led many to worry that his death could lead to significant delays in the approval of a variety of plea bargains signed by more than seventy Odebrecht executives. So deep were the doubts that there has been an undercurrent of disbelief surrounding his death, including a series of questions about the suspicious conditions surrounding the plane crash that killed him. Like other tragic and high profile deaths in recent Brazilian history, uncertainty about the cause of Zavascki’s death may linger. But the rumors are motivated at least in part by recognition that the Lava Jato investigation has threatened many of the backroom bargains that lie at the heart of Brazilian politics, and by fear that the beneficiaries of those bargains now appear ready to take advantage of Zavascki’s vacancy to slow and even turn back the judicial clock. Already, there are justices on the STF who are seen as unsupportive of Lava Jato. Some are driven by sincere legal convictions, such as the protection of defendants’ civil rights, while others are simply mercurial or plain partisan. The upshot is that the STF – which must judge all cases against sitting federal politicians – hangs in the balance, at a critical moment when the Odebrecht plea bargains have been approved by chief justice Cármen Lúcia Antunes Rocha, and dozens of cases against leading federal politicians appear to be nearing judgment. Temer has nominated his justice minister, Alexandre de Moraes, as Zavascki’s replacement. Although he is a prosecutor, Moraes has spent much of the last fifteen years as a political appointee in state and federal government. Newspapers have accused him of plagiarism on his doctoral thesis, and of being too much of a politician, rather than a technical judge in the Zavascki mold. More worrying in light of the Lava Jato case is his previous role as defense lawyer to Eduardo Cunha, the disgraced former Brazilian Democratic Movement Party (PMDB) congressman who presided over the lower house of Congress during last year’s impeachment drama. If confirmed, Moraes will be one of eleven justices ruling on Cunha’s case, as well in the pending corruption trials of Cunha associates. Leading editorial pages are tinged with alarm. Temer, meanwhile, has floated the idea of nominating a criminal defense lawyer or a PMDB stalwart as Moraes’s successor in the Justice Ministry. There is nothing wrong, of course, with having a defense lawyer as justice minister – one of Brazil’s most influential justice ministers during the Lula years, Márcio Thomaz Bastos, came from a similar professional background and was instrumental in pushing forward very important anticorruption reforms. Meanwhile, the conditions for anticorruption efforts have greatly improved in Brazil in recent years, and politicians’ efforts to save their own skins will be resisted by civil society, prosecutors, and judges. Zavascki’s replacement as supervising justice on the Lava Jato case, Luiz Edson Fachin, is believed to be a disciplined and balanced judge, and he has just authorized investigations against a variety of high-level PMDB politicians, including former president José Sarney. But the optics are quite bad, not least because the new appointments come against a backdrop in which a third of the Congress faces criminal cases before the high court, and the Odebrecht plea bargains open the way to new charges against approximately fifty federal politicians. It is hard to avoid the conclusion that the scandal-plagued PMDB and its allies seem to be doing everything they can to save themselves. The chutzpah of politicians under Lava Jato’s scrutiny is remarkable. There have been a variety of efforts to roll back anticorruption statutes and to restrict prosecutors’ leeway. Already, the congress has quashed a ten-point reform package proposed by prosecutors and supported by more than two million citizens in a public petition. Last week, Temer nominated another scandal-ridden advisor to become a minister, in a move many interpreted as a bid to give him privileged legal standing, since ministers can only be tried in the STF, a timid court which has convicted only four sitting politicians since the return to democracy three decades ago. Congress this week has been debating a proposal to weaken the electoral court’s ability to punish political parties for campaign finance violations. The Senate has elected a scandal-laden PMDB heavyweight, Edison Lobão, to head the constitutional committee that will vet Moraes, as well as a new prosecutor general later this year. Temer has tried to stay above the fray, denying allegations that have emerged about his own ties to corrupt dealings, and trying to focus Brasília’s attention on desperately needed fiscal reforms. Appointing stalwart allies to the STF and cabinet positions may buy him congressional support that will help move forward the reform agenda this year. But in the long run, raising the hurdles to effective accountability could set back Brazil’s reform agenda for a long time to come. If Lava Jato is stymied, and politicians are seen to have gotten off the hook, a popular backlash could very well shift the advantage in the 2018 presidential elections to a rightwing populist or a revanchist leftist. The governability that Temer’s appointments purchase today may have costs to the deep reforms that Brazil desperately requires during the next president’s term.

Transparency International yesterday released its annual Corruption Perceptions Index (CPI) that ranks 176 countries on a scale from zero (highly corrupt) to one-hundred (very clean), based on the opinions of citizens and experts. As in years’ past, Nordic countries fared best. Denmark topped the list (tied with New Zealand), followed by Finland, Sweden, and Switzerland. Ranked worst were Yemen, Syria, North Korea, South Sudan, and Somalia. Regionally, Europe stagnated compared to last year, sub-Saharan Africa progressed unevenly, and Middle Eastern and North African countries saw sharp declines. Most Asia Pacific nations continued to post failing grades (scoring forty points or less). Latin America’s fight against corruption, witnessed in the region’s ongoing headlines and rising number of domestic cases, generally hurt perceptions. Mexico took the biggest hit. Continued revelations of flagrant wrongdoing by numerous governors and other public officials—followed by few investigations or prosecutions—led the nation to plummet twenty-eight places to 123, alongside Honduras and Sierra Leone. After two years of declines, Brazil’s score stabilized, even as the Lava Jato investigations expanded and deepened. This year’s further arrests, prosecutions, and convictions seemed to give some confidence that law enforcement might change things. Argentina’s score improved to its highest in five years, reflecting widespread sentiments that Macri’s government will be cleaner than that of his predecessor, Cristina Fernández de Kirchner. Scores for Honduras and Guatemala, both suffering from their own corruption scandals, remained roughly even, though their rankings fell relative to others. Though many criticize the index for measuring perceptions rather than realities, the survey remains one of the best indicators of global and regional corruption trends. And as my colleague Matthew Taylor points out, it draws the attention of policymakers, law enforcement and the public—those that will need to come up with actions and solutions if their countries are to change.

We know very little about who will run Western Hemisphere affairs under the Trump administration. So far, the only named appointees are Homeland Security Secretary John Kelly and National Security Council (NSC) Senior Director Craig Deare. There are as yet no nominees for key Western Hemisphere positions at State, Defense, or Commerce, which is not unexpected for an administration this young. Although the Latin America team is not fully formed, the pressing Latin America agenda – which will get underway in earnest with today’s visit by a Mexican delegation – suggests that it is well worth reflecting on the central questions likely to determine the trajectory of the region during Trump’s presidency: Mexico: The wall, immigration, and NAFTA may all be on the table when Mexican Foreign Minister Luis Videgaray and Economy Minister Ildefonso Guajardo come to Washington this week, followed by President Peña Nieto at the end of the month. Even after today’s executive order paving the way for a wall, the central question looming over the talks – led on the U.S. side by Reince Priebus, Stephen Bannon, Jared Kushner, Peter Navarro, Gary Cohn, and Michael Flynn – is just how far Trump is willing to go. Is the incendiary campaign rhetoric about NAFTA simply the opening gambit of a negotiating strategy, as some suggest, or is Team Trump really sincere in its desire to sink the most successful hemispheric trade deal of all time? In the meantime, what does this uncertainty do to the Mexican economy, given that 85 percent of Mexican exports are to the United States and the country has already seen a decline in U.S. investment? What are the implications for integrated supply chains throughout NAFTA? What effect does a worsening labor market in Mexico have on migration flows? The Mexican response to Trump: Peña Nieto’s response so far has been measured, displaying perhaps a disbelief that Washington will allow the bilateral relationship to be scuttled, a recognition that there are elements of NAFTA that deserve renegotiation, and a desire to quickly resolve the uncertainty that is wreaking havoc on business decisions. But Penã Nieto is under considerable pressure to respond forcefully to U.S. pressure. Many Mexican thought leaders – such as Enrique Krauze and Jorge Castañeda – have called for the country to retaliate against any U.S. bullying by easing controls on both Mexican and Central American migration, backing down from the drug war, or building international alliances with China and Russia. The Peña Nieto administration has noted that the “whole relationship” is up for discussion – a subtle hint that the United States has much to lose if Mexico ceases to cooperate on security and migration. Mexican policymakers have also expressed their willingness to perhaps even contemplate dropping NAFTA if the United States pushes too hard. The frontrunner in the July 2018 elections, Andrés Manuel López Obrador (AMLO), seems unlikely to be more conciliatory than Peña Nieto’s Institutional Revolutionary Party (PRI) and, if anything, his electoral prospects seem enhanced by the bullying tone out of Washington. How far will the Mexican response go? Elections: As the AMLO phenomenon demonstrates, there is likely to be a Trump effect on the electoral landscape of Latin America. The mobilizing effect of Trump’s rhetoric is already being exploited by Corona beer, which has hit back hard against Trump’s vituperative statements with a well-received public relations campaign mocking Trump’s wall-building and America first jingoism. Silly though that may be, it points to the enormous public repercussion of Trump’s words south of the border. The next two years will bring elections in half of Central and South America, and although much has been made of the supposed rightward turn in the region, is it possible that nationalistic appeals responding to perceived American jingoism might provide succor to the left and/or to nationalist forces? Cuba: How far will Trump turn back the thaw in relations that took place during the second Obama administration? And what will be the practical effect on Cuba’s planned 2018 leadership transition? While some lawmakers are pushing for more pressure on Cuba for human rights, it seems unlikely that the administration would be able to completely unwind U.S. investment on the island, given growing U.S. business interests. Even as he has promised to review Cuba regulations, Secretary of State Rex Tillerson seems to have put some space between himself and the most dramatic Trump campaign oratory. But a harder rhetorical line and the possibility of renewed sanctions from Washington may strengthen hardliners within the Cuban regime and diminish the impetus toward reform; already it has led to nationwide military exercises that belie the Cuban regime’s concern about a return to a more confrontational relation. Venezuela: Does the country implode slowly or explode catastrophically? And how does Washington respond? The Trump administration has so far adopted a fairly measured tone regarding Venezuela, but recent statements by lawmakers on both sides of the aisle calling for further targeted sanctions against President Nicolás Maduro’s officials may contribute to a ratcheting up of rhetoric against the autocratic chavista It seems unlikely that the Trump administration would continue talks with the regime that had taken place during the late Obama administration. But there are not many good multilateral options for addressing Venezuela’s crisis, nor is it clear that there are many effective unilateral options beyond targeted sanctions. Nevertheless, the deepening economic crisis and the increasing power of hardliners within the regime suggests that Venezuela will soon become a hemispheric hotspot, worsening the already devastating humanitarian crisis in ways that could test the new administration’s capacity to galvanize a regional response. Colombia: Although the peace deal has now been approved by the Colombian Congress, will the Trump administration commit to funding the peace? Even before Trump’s victory, there was uncertainty about the U.S. Congress’ willingness to fund the peace over the long haul, although it was heralded on both sides of the aisle as a rare bipartisan foreign policy success and a vindication of the huge investment in Plan Colombia. Homeland Secretary Kelly noted before his confirmation that it was “imperative” that the United States remain involved in Colombia, but Secretary of State Tillerson cast doubt on that commitment in his written responses to the Senate Foreign Relations Committee. Given continued lobbying by former president Álvaro Uribe and the isolationist tendencies of some Trump administration officials, it is by no means a certain proposition that the administration will invest in the Colombian peace, especially if Congress’ attention turns elsewhere. China, investment and trade: The Trump administration’s withdrawal from the Trans-Pacific Partnership (TPP), its promised renegotiation of NAFTA, and its inward-looking rhetoric have begun what looks like a paradigmatic shift of the trade and investment panorama in Latin America toward the east and the south. In the absence of a better deal up north, the Pacific Alliance is the new hot thing in the region. One Brazilian diplomat snidely remarked that Trump’s victory means that “Mexico will have to remember that it is Latin American.” Mexico has already suggested that the Pacific Alliance turn southward to Mercosur, which appears more open than ever to a deal that allows its Atlantic membership to reach Pacific markets. The savings-depleted nations of South America are also happy to turn eastward for increased foreign investment that might enable them to recover from the economic downturn. China is well aware of the opportunity this presents: President Xi Jinping arrived for the Asia-Pacific Economic Cooperation (APEC) summit in Peru only ten days after the U.S. election. Latin American countries are already moving “to put their eggs in a [Regional Comprehensive Economic Partnership (RCEP)] basket,” led eastward by Chilean and Peruvian expressions of interest. Will the end of TPP presage greater hemispheric trade integration, centered around a Mercosur-Pacific Alliance deal? What would be the implications of an even greater Chinese economic role in the region? Would the Chinese be willing to incorporate Latin America into RCEP? Would RCEP complement or weaken the BRICS, and what are the implications for the relative roles of Mexico and Brazil as regional leaders (and sometimes rivals)? Central America: These countries will likely be squeezed by the United States’ cooling trade relationship with Latin America, the stronger anti-migration rhetoric of the new administration, and the possibility that the US will double down even further on hardline measures in the drug war. The big questions for Central America will be: does the United States maintain the CAFTA-DR trade agreement (which was not mentioned by the Trump team during the campaign)? Where does the Trump administration find the balance between its stated desire to cut foreign assistance budgets and the need to maintain aid programs designed to slow migration and quell security problems? And how will migration and remittances be affected by the Trump administration’s emphasis on illegal workers and the border, amidst already desperate conditions that led to increasing apprehensions of Central Americans in Mexico and the United States in recent years, and a record-breaking 2.7 million deportations under the Obama administration? Anticorruption: In recent years, the U.S. government has played a largely unheralded role in anticorruption efforts in Latin America, ranging from support for Guatemala’s CICIG (International Commission Against Corruption and Impunity) to indictments and actions against firms and executives accused of corrupting regional officeholders. While it does not seem likely that the U.S. Department of Justice will shut down Foreign Corrupt Practices Act (FCPA) enforcement (given the pipeline of pending cases, the competitiveness arguments that can be made for FCPA, and the investments that have been made by business to ensure compliance), in all likelihood the anticorruption agenda at both State and DOJ will become far less of a priority under a regulation-averse Trump administration. Will the Trump administration actively work to water down anticorruption efforts and cross-border enforcement? If so, what will be the repercussions for countries that have undergone significant anticorruption reforms in recent years, and are seeking to consolidate anticorruption gains, often against powerful domestic opposition? The Monroe Doctrine: Given the proximity of Latin America to the U.S. homeland, Washington policymakers have long been concerned by the efforts of countries like Iran, Russia, and China to penetrate into the hemisphere. Trump’s Latin America advisor on the NSC, Craig Deare, has written critically of Secretary John Kerry’s 2013 declaration that the “era of the Monroe Doctrine was over,” noting that it served “as a clear invitation to those extra-regional actors looking for opportunities to increase their influence.”[1] He further argued, with reference to China’s growing role in Latin America, that the United States has the right to protect its geopolitical interests in the region, and “if it does not do so, [it] cedes to China its strategic goal of ‘reshaping the current world system in a fashion more to its liking.’” Will the Monroe Doctrine be resurrected? What are the practical implications of this renewed emphasis on U.S. primacy in the region? As the United States turns inward, what tools will policymakers have to prevent perceived meddling by extra-regional forces? How will the Trump administration balance its rapprochement to Putin with concerns about, for example, Russia’s growing role in Venezuela? How will the administration react if Latin America does indeed turn more forcefully to Asia, and particularly China, on trade? In sum, although Latin America has long been one of the most neglected regions of U.S. foreign policy, the next four years are likely to significantly shift the trajectory of regional relations, regardless of whether the Trump administration adopts an active or passive role. The coming appointments of key Latin America personnel will provide us with a better sense of where the administration hopes to come down on some of the questions raised above. [1] Deare, Craig A. “Latin America,” in Charting a Course: Strategic Choices for a New Administration, edited by R.D. Hooker, Jr. Washington: National Defense University Press, 2016.