Latin America’s Moment

18 million Latin Americans—1 in 5 of those between the ages of 15 and 24—neither work nor attend school. Commonly dubbed “ninis” (ni estudian ni trabajan), a new World Bank report looks at this phenomenon across the region. Latin America’s share falls near the world average—far better than the Middle East and North Africa, where one in three roam the streets, but nearly double the rate of industrialized nations. It also varies by nation. In Peru there are fewer ninis than in the United States, while in Central America over a quarter of adolescents are disconnected. The majority are young poor urban women who drop out of school or the workforce after a teen pregnancy or early marriage. The men come from similar backgrounds, leaving school for a precarious job market. In general, conditions are getting better—the share of ninis fell from 23 to 19 percent of young people between 1992 and 2010. These percentage improvements come almost solely from young women, who now stay in school longer, and, when they do leave, find jobs. For men, those that abandon school struggle to find work, filling the ranks of the 2 million more ninis than in the past. Latin America’s disengaged youth threaten the region’s economic advancement. Studies show that lifetime earning power dissipates with just a few years out of the workforce, as individuals stop accumulating human capital and skills. Once excluded, many will only find work in the informal sector—where they will earn less, be less productive, and receive fewer benefits. This reinforces the region’s inequality—with most ninis coming from the lower socioeconomic ranks, they and their families will likely stay there. Excluding millions of young people also wastes Latin America’s current demographic bonus. If these countries are to grow rich before they grow old, they can’t have 18 million working age people on the sidelines. And the disconnectedness links to rising violence, particularly in Mexico, Colombia, and Central America where levels of violence and ninis spiked together. A report by the Wilson Center shows the single most predictive factor of Central American violence is schooling—the more education local youths have the less violent their neighborhood. Broader criminology studies echo this finding—that as education rises crime falls. For policymakers taking on the ninis problem, one challenge is keeping young people in school. They need to convince kids and their families that school matters, and help support this choice—in the form of conditional cash transfers, scholarships, and other policies—so that children don’t have to choose between the classroom and sustenance. Another challenge is ensuring that when kids graduate they find work. Through job training, entrepreneurship programs, and employment services, governments can help link jobseekers with companies and opportunities. The regional economic downturn, leaving so many more vulnerable, makes a response all the more important.

Last week, I had the privilege of testifying before the U.S. Senate Committee on Foreign Relations at a hearing titled "Political and Economic Developments in Latin America and Opportunities for U.S. Engagement." Also joining me before the committee were Thomas McLarty, chairman of McLarty Associates, and Eric Farnsworth, vice president of Americas Society and Council of the Americas. In my written testimony I laid out the largely positive trends in Latin America and the benefits for the United States of working more closely with countries in the region. I also called for deepening integration with Mexico and Canada, and supporting the rise of homegrown anticorruption efforts throughout the region. Below is an excerpt. As the United States grapples with extremism and authoritarianism abroad, Latin America is largely a good news story. The region has changed dramatically over the past few decades, mostly for the better. Today the region is overwhelmingly democratic. Authoritarian rule is mostly relegated to the past, replaced by competitive parties, vibrant civil societies, and institutional checks and balances. Latin America is home to an increasing number of market-friendly economies with close ties to the United States. Over the last twenty-five years trade with the region outpaced that with the rest of the world, as U.S. exports to Latin America jumped sevenfold. These nations now buy over a quarter of all U.S. exports, supporting tens of millions of jobs here at home. Many of our products are bought by the region’s middle class, which added over 100 million members during the last decade’s economic prosperity. In South America, this socioeconomic center comprises a near majority of the continent’s 400 million citizens. Latin America is also resource rich, containing 20 percent of the world’s oil reserves, as well as numerous other commodities. Finally, the region largely shares U.S. values, providing many current and potential allies for the United States when negotiating complicated global issues in multilateral forums, including financial architecture, climate change, and transnational organized crime. Recent changes, from the normalization of U.S.-Cuba relations to the election of Mauricio Macri in Argentina, further the potential for positive shifts in bilateral and regional relations. You can read the rest of my written testimony, read the written testimonies of my fellow witnesses, and watch a recording of the hearing on the U.S. Senate Committee on Foreign Relations website.

The past year has altered Latin America’s diplomatic panorama. Among the most significant changes were a U.S. policy turnaround that included U.S. rapprochement with Cuba, a reset in U.S.-Brazil relations cemented during President Dilma Rousseff’s June state visit to Washington, DC, and greater U.S. participation in the Colombian peace talks. In addition to these carefully strategized advances, a variety of far more contingent factors is converging in ways that are likely to shake up established regional alignments within South America. As the region prepares for the fourth Community of Latin American and Caribbean States (CELAC) summit at the end of January, the rightward shift of domestic politics in the region, the woeful state of Brazil’s Rousseff government, and the Pacific turn in trade negotiations are combining in ways that may create a new set of opportunities for regional relations, and will certainly jumble the status quo. The Chinese slowdown, the end of the commodities boom, the decline in oil prices, and the failure to undertake deep reforms that would improve long-term economic and political prospects have triggered a shift in domestic politics across the region. As various sharp analyses have noted recently, this probably spells the end of a long period of extraordinary political stability that has endured for fifteen years in countries as varied as Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Uruguay and Venezuela. In two of these countries, Argentina and Venezuela, noisy change came at the end of last year. The replacement of the Kirchner dynasty by President Mauricio Macri has already led to a substantial shift in economic policy rhetoric. This may be the leading edge of a regional move away from profligacy; as Marta Lagos cleverly noted, there is no populism without money. But the continued popularity of the Kirchner policy mix and the minority status of Macri’s coalition suggests that some of his more ambitious domestic reforms will have limited legislative support. Macri’s limited scope of action at home, combined with a Rousseff government desperate to escape its domestic troubles, might provide an opportunity for a long-overdue reckoning on Mercosur’s political and economic objectives. The symbolic importance of Mauro Vieira’s visit to Buenos Aires in mid-January was hard to miss: the Brazilian became the first foreign minister to meet with his counterpart Susana Malcorra and discuss the two countries’ shared “bilateral, regional, and multilateral” agenda. Simultaneously, there has been a subtle shift in the regional attitude toward the reddest of the so-called “pink tide countries” that had governed much of South America since the turn of the century. The legislative victory of the opposition coalition Democratic Unity Roundtable (MUD) in Venezuela’s December elections triggered the first regional crisis of 2015, and the showdown between the opposition-led National Assembly and the Chavista-friendly supreme court has been the central focus of foreign ministries across the region for much of the past month. Predictably, both the Organization of American States (OAS) and the United States expressed concern about the Venezuelan supreme court’s decision voiding elections in the state of Amazonas and declaring National Assembly legislation null until the contested legislators were removed from office. More surprising, perhaps, was the Brazilian government’s decision to express its confidence that “the constitutional prerogatives of the new National Assembly” would be preserved, a signal to President Maduro’s government that there were limits to Brazilian tolerance for extra-constitutional meddling. Brazil’s rotten prospects for the year ahead—Brazilians joked that when they said “Happy New Year!” on January 1, they were actually referring to 2017—contributes to the regional window of opportunity. Rousseff’s first five years in office were foreign policy averse: she eschewed the globetrotting of the Lula years, even as the country’s BRICS partners stumbled. Gone are the days of a Brazilian quest for a UN Security Council seat, or a comprehensive Doha Round negotiation led by a Brazilian World Trade Organization (WTO) president. In their place is a petty spat with Israel that has sputtered on since mid-2014, now focused on what is, to many Brazilians who follow global affairs, the indigestible nomination of a prominent settler in the occupied territories as Israel’s ambassador to Brasília. Meanwhile, the current corruption scandals and the related crisis of state capitalism in Brazil have undermined the country’s regionalized foreign policy, founded on Mercosur and Unasur as counterweights to U.S. influence in the hemisphere. And there is precious little clarity in Brasília these days about where the country should focus its foreign policy. But desperation might be a source of invention. Already, the scramble to find new sources of investment that might make up for the credit-strapped public banks, like the National Economic and Social Development Bank (BNDES) and Banco do Brasil, or to restore the capacity for public infrastructure spending, has led Brazil to new ventures, such as the $20 billion Brazil-China Fund. The crisis seems likely to prize open foreign investment opportunities as well, as state owned enterprises are forced to abandon their prior emphasis on national preferences in a desperate search for partners. Finally, the regional realignment is being driven by the shock imposed by the Trans-Pacific Partnership (TPP). While TPP seems very unlikely to move to ratification during President Obama’s final year in office, the shock of the “Pacific” countries’ turn to Asia—via TPP or the Pacific Alliance—has led to cries of desperation in many “Atlantic” countries who see themselves being left behind. In sum, although declining oil prices, lower commodity prices, and negative growth have diminished the ambitions expressed at the turn of the century, they have refocused South American foreign policy discourse in a realistic and potentially productive new direction.