Latin America

Hunter Marston is a senior research assistant at the Brookings Institution, where he works in the Center for East Asia Policy Studies and for The India Project. You can follow him on Twitter @hmarston4. China’s economic growth, rising military power, and deepening cultural ties with many states have outstripped many U.S. policymakers’ predictions a decade ago, and left them wondering about the implications of China’s rise for global security and what remains of the liberal world order. President Xi Jinping has dramatically reshaped China’s presence and power on the world stage, touting a “new model” for developing countries to follow and advocating a “new type of international relations”; unlike predecessors such as Jiang Zemin and Hu Jintao, Xi openly promotes China as a model of development. China’s deepening trade ties with the developing world, massive financing for projects in other states through its Asian Infrastructure Investment Bank, and expansive vision for connectivity via its Belt and Road Initiative, suggest a 21st century order that eventually may have Beijing at its center. With China in ascendance on so many fronts, the new volume China Steps Out: Beijing’s Major Power Engagement with the Developing World, edited by Joshua Eisenman of the University of Texas-Austin’s Lyndon B. Johnson School of Public Affairs and Eric Heginbotham of MIT’s Center for International Studies, is a timely contribution to the literature on China’s foreign policy and development strategies. Its six regional analyses offer a thorough overview of China’s expanding relations with states in Africa, Latin America, the Middle East, Central, South, and Southeast Asia, assessing Beijing’s approach to various parts of the developing world, and looking for broader similarities in Beijing’s strategies. While the breadth of this book would seem to threaten its cohesiveness and focus, the editors provide an approachable reading experience by employing a thoughtful thematic structure to each chapter, analyzing, in turn: China’s primary objectives; means (economic investment, military diplomacy, cultural ties, etc.); how effective Beijing has been in achieving those objectives; and how other countries perceive China’s efforts to achieve Beijing’s goals. As Eisenman and Heginbotham reveal in their introduction, Beijing’s overseas strategy encompasses several overlapping areas: economic investment; political and diplomatic outreach; security cooperation; and cultural ties. As the editors recount, Xi Jinping has actively championed his desire for a “multipolar world and democratic international relations.” He also publicly has promised that China will remain a status quo power that supports the existing world order, although whether Beijing will actually play that role is very much an open question. The chapter by Derek Mitchell, former U.S. ambassador to Myanmar and currently senior advisor to the Asia Program at the U.S. Institute of Peace, provides essential framing of China’s history of interaction with the developing world, reminding the reader that China had previously been a great power competitor of the United States and Europe centuries ago. Mitchell describes imperial China at the peak of its international influence in the 15th century: “As the Chinese imperium expanded, so did the territory required to serve as a buffer to protect it.” He concludes that, “There is little...that suggests it is China’s natural state to forge international partnerships of equality and mutual respect.” Echoing its imperial past, Beijing today has demonstrated its willingness to use heavy-handed tactics to achieve foreign policy goals. Heginbotham’s chapter on China-Southeast Asia relates delineates China’s economic outreach, diplomacy, military-to-military links, and cultural ties with the region in which it probably has the most influence, and is closest to becoming the regional hegemon. Heginbotham parses variations in Chinese strategy toward larger and smaller countries in Southeast Asia, observing how Beijing prefers to co-opt weaker powers with large sums of aid or investment, and, having brought into its fold smaller states like Cambodia, is dedicating considerable diplomatic capital to wooing sizeable powers like Indonesia, which is not a U.S. ally and is increasingly dependent on Chinese aid and investment. In many countries in Southeast Asia, however, Beijing’s focus on elite ties has made it a target of grassroots animosity, a problem the Chinese government has faced in other developing regions as well. Myanmar citizens have protested environmental destruction and unpaid land confiscation surrounding oil pipelines and hydropower dams backed by the Chinese government. As Heginbotham reveals, massive Chinese investments in Southeast Asia, particularly in infrastructure projects and in states with poor legal frameworks, can exacerbate inequality and graft in recipient countries. Heginbotham notes that Chinese investment in Laos accounts for 66 percent of all foreign direct investment, in one of the poorest states in East Asia. He contends that Chinese government aid has largely benefited Chinese firms operating in Laos and the government in Vientiane, without trickling down to the people of Laos. In Central Asia, Beijing has benefited, in recent years, from the relative absence of other major power competitors beyond Russia, which is unable to match China’s aid in the region. The United States under George W. Bush renewed attention to Central Asia given its strategic importance to the global war on terror, but declining U.S. government interest in the region in recent years left a void for Beijing. As Raffaello Pantucci of the Royal United Services Institute and Matthew Oresman of Pillsbury Winthrop note in their chapter on China-Central Asia relations, despite the region’s desire for more U.S. investment and stronger diplomatic relations with Washington to balance growing Central Asian dependency on Beijing, “Central Asian governments have learned that they cannot count on the United States to be a consistent partner.” Instead, they write, the region has become a “foreign policy testing ground” for China. Central Asia offers Beijing the opportunity to measure the success of the first multilateral institution, the Shanghai Cooperation Organization, which it cofounded in 2001. Central Asia also showcases Beijing’s intersecting energy and military diplomacy; in Central Asia, Beijing’s Belt and Road projects demand greater security cooperation with neighboring partners to mitigate investment risks. Chinese influence in Central Asia, however, suffers from some of the same challenges it does in Southeast Asia. In Kazakhstan, Pantucci and Oresman describe how massive Chinese investment in Kazakh energy companies have enriched Kazakh elites and in 2016 triggered protests over proposed legislation that would expand Chinese land ownership in Kazakhstan. In his chapter on China-South Asia relations, Jeff Smith of The Heritage Foundation echoes some of Beijing’s challenges in Central Asia. This analysis is especially timely given China’s controversial leveraging of debt to gain control over ports in Sri Lanka and political influence in the Maldives. Traditionally New Delhi enjoyed considerable influence in Sri Lanka, but the balance of power has shifted dramatically in recent years as China has poured investment into the country. As Smith observes, today more than a third of Sri Lankan government revenue goes to repaying Chinese debt. Beyond overt Sino-Indian competition for influence, Smith provides a nuanced understanding of how some of the smallest South Asian countries have balanced China and India off one another to protect their interests. His account of last year’s Sino-Indian border dispute in Bhutan shows how the Bhutanese government skillfully played the two powers. The book’s China-Africa chapter, co-written by Eisenman and David Shinn, former U.S. ambassador to Burkina Faso and Ethiopia, shows how China’s foreign policy in sub-Saharan Africa has evolved significantly from the revolutionary ideology of the 1960s and 1970s to one of pragmatism. In Africa China is making a high-stakes bet on the future of global growth, financing infrastructure projects, contributing to peacekeeping forces, and supporting antipiracy missions, to create a stable investment landscape. Beijing has also provided military arms and diplomatic backing to regimes such as South Sudan and Zimbabwe to maintain influence in those states. As the authors note, Beijing also has in recent years successfully convinced countries like Gambia and Sao Tome and Principe to abandon diplomatic relations with Taiwan, further adding to Taipei’s global isolation. The Chinese government has signaled its willingness to play the long game to earn popular support in Africa, investing in telecommunication companies and media corporations, and spending money on cultural exchange programs. However, as in Central Asia, China has succeeded at cementing its influence in part because of the absence of competitors such as the United States, which invests comparatively little (financially or diplomatically) in the region. Nevertheless, there is growing public concern about China’s influence in Africa. The authors discuss, for instance, the Democratic Republic of the Congo, where locals increasingly resent competition brought by Chinese firms that utilize imported labor, and demonstrators have targeted Chinese businesses. In the Middle East, as Sarah Kaiser-Cross, a Dubai-based financial analyst, and Yufeng Mao, an assistant professor at Widner University, show in their chapter, Beijing has primarily sought to secure its own energy needs by linking Belt and Road projects to its energy supply lines. Largely this is due to Chinese dependency on Middle Eastern oil, which accounted for 48 percent of China’s total oil imports in 2016. Needing energy, Beijing has facilitated expansion of state-owned oil companies such as SinoPec into countries like Saudi Arabia and Iran. While China’s repression of its Uighur Muslims at home hurts its public image in the region, six of seven Middle Eastern countries surveyed in a 2014 Pew Research Center poll believe China is having a positive impact on their economy. Beijing has also made inroads in Latin America, as R. Evan Ellis, research professor at the U.S. Army War College, illustrates in his chapter. Following a surge of Chinese trade and investment over the past fifteen years, Beijing has sought to embed itself in Latin American regional institutions. Ellis’ chapter also demonstrates that populist governments like that of Venezuela, historically suspicious of free trade and democracy, have been quick to embrace Chinese support, although Beijing has also built close ties with longstanding Latin American democracies. More recently, U.S. President Donald J. Trump’s insistence on renegotiating the North American Free Trade Agreement (NAFTA) and decision to withdraw from the Trans-Pacific Partnership (TPP), which includes Mexico, Chile, and Peru, has increased the appeal of China as an economic actor in the region. As China’s economic and strategic relations with developing nations have expanded dramatically, it has often contradicted its reassurances of acting as a peaceful power and respecting current global institutions, nearly all of the authors in the book show. The volume offers a measured but perhaps overly neutral analysis of Chinese behavior. However, this reticence to impart value judgments is rare among academic perspectives, and it allows the reader to decide for oneself whether the sum of China’s influence is more benign or not. Only in their conclusion do the editors acknowledge: “some Chinese activities in the developing world…threaten peace and stability” and aim “to alter the status quo” of the liberal world order. How the Xi Jinping government resolves this contradiction will be a critical question in the next stage of its relations with developing states.

President Michel Temer’s decision to send troops into Rio de Janeiro officially killed not only Brazil’s pension reform, but also remaining hopes that he might tackle the litany of structural changes to the tax, labor, education and regulatory systems that economists and investors see as the country’s economic salvation. Yet these now-defunct reforms aren’t the only way to bolster growth. Trade matters as much or more for juicing gross domestic product, as the influx of goods, services and competition can help attain the economic holy grail of rising productivity. And given the U.S. protectionist pullback, opening to the world could, for once in Brazil, be politically popular in this election year. Brazil has always been a reluctant trader. Despite its natural resource bounty, it remains one of the world’s most closed economies. Its handful of formal trade agreements give it preferred access to just 10 percent of global markets and contain hundreds of exceptions, diminishing their reach and heft. These self-created handicaps keep Brazil out of the more profitable parts of global supply chains, instead largely stuck supplying raw materials to other nations’ factories. And the relatively heavy taxes on imports drive up costs for local companies and consumers alike. Yet Brazil’s lofty barriers also mean that reform could bring much more bang for the buck. A 2014 McKinsey study estimated that by opening its economy, Brazil could add 1.25 percent to annual GDP growth, more than labor or regulatory reforms would bring, and similar in scope to a total tax overhaul. These economic benefits from trade matter even more as Brazil’s population ages. From 1990 to 2012, new workers drove more than half of all GDP gains, some 1.8 percent a year. Yet this demographic bonus is ending -- in less than a decade, Brazil’s children and elderly will outnumber its breadwinners -- and that will cause a once-reliable engine of growth to sputter. Brazilian politicians understand the costs of protection. They give national aerospace champion Embraer the freedom to import equipment and components free of the tariffs other industries face. Their jets are now globally competitive. This stands in sharp contrast to Brazil’s automakers, which enjoy no such privileges. Brazilian cars as a result take twice as long to make and are 40 percent more expensive than those in Mexico. Their paltry exports go largely to captive Mercosur trading partner Argentina. The political timing for opening up may finally be right. Trump’s penchant for threatening -- if not breaking -- so many extant trade deals could spark reconsideration of an issue that used to be all but taboo in Brazil’s politics. In a country where fewer than two in 10 people like the U.S. president, anti-Trump issues can be in vogue. And by pulling back, the U.S. has given Brazil space to shape new accords more to its liking. The power struggle that sunk the Free Trade Agreement of the Americas in the mid-2000s has faded with America’s absence. EU-Mercosur talks are the place to start. After nearly two decades of on-again, off-again talks, the participants are trying to break through standoffs on agriculture and rules of origin. Trump’s recent tariff hikes on steel and aluminum tariffs, hitting industry on both sides of the Atlantic, could foster the camaraderie needed to overcome the last sticking points. Also ripe for a Brazilian rethink is the Pacific Alliance. Founded by Mexico, Colombia, Peru and Chile, the ambitious agreement goes after not just tariffs but also barriers to investment, services and the movement of people. Brazil’s participation would jump-start aspirations for Latin American economic integration. Most ambitious would be joining the revised Trans-Pacific Partnership, opening nearly a third of the world’s markets to Brazil’s companies, and changing the way government procurement, intellectual property protection, and public and private credit work in the Southern Cone nation. Dropping barriers would bring turmoil to some sectors, no doubt. In the 1990s Brazil unilaterally reduced tariffs on many goods -- leading imports to double as a percentage of the economy even as exports stagnated. Many unproductive companies faltered and failed, and some of their former employees have yet to recover. Brazil’s clothing and shoe factories and gas production are similarly vulnerable to more opening, even as car makers and other advanced manufacturers stand to gain. Yet for Brazil to grow faster for longer, it has to become more globally competitive. The now-stymied internal structural reforms are one path; economic opening is the other. And as Embraer and the many agro-businesses show, when given a bigger and more level playing field, Brazil’s companies can thrive. But they need the preferred access to markets that trade agreements would bring. Law and order and anti-corruption promises dominate the early presidential campaign slogans. Yet polls show Brazilians care most about their pocketbooks. Trade’s promise of cheaper and better goods could appeal to middle- and upper-class Miami-bound shoppers and poorer Bolsa Familia recipients alike. And for the broader economy, it would bring a much-needed win. View article originally published on Bloomberg View.

Welcome to “Women Around the World: This Week,” a series that highlights noteworthy news related to women and U.S. foreign policy. This week’s post, covering March 1 to March 9, was compiled with support from Alexandra Bro and Anne Connell. Paraguay criminalizes femicide The government of Paraguay enacted a new law that criminalizes femicide, obstetric violence, and online abuse against women. In addition, the law creates a standardized system to collect data on gender-based violence and provides support for survivors, including free legal assistance, skills training, and access to shelters. The measure aims to combat high rates of violence against women in Paraguay, including 49 femicides and over 13,000 reported cases of domestic violence last year—the highest rate on record. By adopting the new law, Paraguay joined seventeen other countries in Latin America and the Caribbean that have criminalized femicide. Notwithstanding these legal reforms, a wave of protests against gender-based violence has spread across the region, fueled by the global #MeToo movement, with protesters using hashtags #YoTambien and #NiUnaMas. Iraq convicts women abetting ISIS A court in Iraq sentenced fifteen women of Turkish nationality to death last week after they were found guilty of joining the self-proclaimed Islamic State group as brides of fighters. The women were convicted of a range of offenses, including illegally entering Iraq and providing the group with material aid and logistical support. They are among the 500 women initially detained in December on suspicion of being affiliated with militants. Recent analyses confirm the significant role some women play in sustaining ISIS and other extremist organizations, including by recruiting new members, raising the next generation of fighters, and, increasingly, serving as operational agents who can avoid detection by security forces. Belgium issues conviction under “sexism law” A Belgian court convicted a man this week for sexist comments made to a female police officer, the first conviction of its kind under the 2014 Belgian law criminalizing sexist actions in public spaces. The man, who told a female police officer questioning him for jaywalking that “being a police officer is not a job for women,” was fined €3,000 and could face one month in prison. Belgium’s legal code defines sexism as a gesture or action that is intended to express contempt or suggest that someone is inferior because of their gender. Belgium is not alone in taking legal measures against sexism and harassment: Portugal recently made verbal sexual abuse a crime, Peru passed a bill defining and penalizing harassment, and French lawmakers are currently considering a law to fine men for harassing women in public.

In 2018, nearly two out of every three Latin Americans will head to the polls to elect new leaders, and the fight against corruption will be high on their agenda. The surge to throw the bums out could be a harbinger of cleaner politics. But a revival of the region’s tradition of populism could also threaten the nascent institutions and mechanisms that are Latin America’s best hope for a more honest tomorrow. Voters are rightly enraged about corruption. Nearly every country has seen its share of high-profile scandals. In Mexico, governors have allegedly stolen land, pilfered workers’ social security contributions, received public contract kickbacks, and even replaced children’s chemotherapy medicine with water to make a buck. In Honduras, tens of millions of dollars have vanished from the social security system under the president’s watch. In Brazil a third of the congress, five former presidents, eight cabinet ministers and scores of other officials are under investigation or indictment for bribery and other crimes. Even the supposedly pristine nations of Chile and Costa Rica have been drawn into the muck: President Michelle Bachelet’s son was part of a shady real estate deal and all three branches of the Central American government were rocked by a cement import scandal. The aggregate costs of corruption for the region are staggering, leeching tens of billions of dollars each year from the Brazilian and Mexican economies, 3 and 5 percent of gross domestic product respectively. In Colombia, an estimated one out of every 10 public dollars disappears — equivalent to the entire health budget. Yet corruption’s emergence as a major political talking point is largely the result of positive regional trends. Nearly all of the nations are now democracies. The shedding of authoritarian pasts has enabled the rise of a freer press, with intrepid reporters eager to uncover misdeeds. Their investigations, in turn, have benefited from new tools, including freedom of information acts that have opened up public logs to scrutiny. In some countries, hard-fought judicial reforms are also bearing fruit, empowering more professional and autonomous judges and court officials to take down wrongdoers. Bolstering these institutional changes are societal shifts. The growth of a middle class — now a full third of the region’s population — means tens of millions of citizens are no longer just focused on day-to-day survival. And they are paying taxes that they hate to have disappear.  Yet almost daily revelations of malfeasance, combined with excruciatingly slow progress in bringing the perpetrators to justice, have led to disappointment, frustration and real anger with the political establishment. As a result, today’s batch of centrist, pragmatic and market-friendly presidents all wallow in the public opinion doldrums — only Argentina’s President Mauricio Macri breaks even on approval ratings. This rising disgust has opened the door again to populist outsiders who use corruption as their new rallying cry. In Honduras, TV personality Salvador Nasralla campaigned on human rights and corruption. In Mexico, Andres Manuel Lopez Obrador hammers his opponents as a political mafia only he can dismantle. In Brazil, though the left remains behind former president Luiz Inácio Lula da Silva despite his corruption conviction, the centrist parties have collapsed under the weight of similar charges. In Colombia, the anti-establishment sentiment is so strong that vice president German Vargas Lleras has cut ties with his party to run on his own. In past decades, Latin America’s economic populists have exploited the real gaps between the region’s have and have-nots, riding these class tensions into office. Once there, they have used their power to override central bank independence, ignore congressional budget limits, and erode other checks and balances. Their profligate spending cultivated their political base even as it led to spiraling inflation, falling investment and an inevitable economic crash, hurting their supporters more than anyone. If this populist past is any guide, today’s anti-corruption crusaders could also make things worse. By trampling legal niceties as they go after those they have identified as past aggressors (usually their political opponents), they could undercut the very slow but real progress that is being made, undermining the transparency and accountability needed to stop similar behavior in their own ranks. In this respect, the recent hurried charges brought against former Argentine president Cristina Fernandez de Kirchner and her cronies are worrisome. Pragmatic, institutionally minded leaders are the only ones equipped to address the underlying reasons for voters’ justifiable anger. What Latin American nations need are incremental improvements that strengthen institutions. What they may unfortunately get is leaders with grandiose but empty promises. View article originally published on Bloomberg.

President Nicolas Maduro has neither the desire nor the capacity to institute the market reforms and debt restructuring needed to revive Venezuela’s sinking economy, says economist Ricardo Hausmann.

As Latin America reflects on its current wave of anticorruption successes—including the arrest of former Guatemalan president, Odebrecht prosecutions in Peru, and the ongoing Lava Jato cleanup in Brazil—it may be both sobering and heartening to consider the history of past anticorruption successes around the world. First, the sobering lesson. Even when things go well, other countries’ experiences suggest that an overall shift in the degree of corruption can take decades. Perhaps the best known example is the United States, where a series of disconnected local and national accountability efforts during the Progressive Era took place—including regulation of the trusts, elimination of patronage hiring in the civil service, and restrictions on corporate campaign contributions.[i] But although many of the reforms took place in the late nineteenth century, they only coalesced into a significant shift in the overall level of corruption in the U.S. between the 1920s and the New Deal. Summarizing a complex history, Glaeser and Goldin use press coverage of corruption to demonstrate an arc-like pattern: corruption rose steadily from 1815 to 1850, but began falling after 1870, reaching a stable lower-corruption equilibrium by the 1930s, where it remained until the 1970s (when the authors ceased data collection). Similarly, Bo Rothstein’s work on Sweden suggests that the process of significantly lessening the degree of corruption in that country was decades-long.[ii] While the slow pace of these changes may be discouraging for Latin American publics frustrated by the damage and unfairness inflicted by persistent political graft and crony capitalism, it may be somewhat heartening to think that even small victories in the short term can trigger enormous development gains, by changing norms, removing dirty players from the political game, and most importantly, by consolidating public support for the continuation of the reform process. As Brazil’s outgoing prosecutor general Rodrigo Janot noted in Washington this week, there is no putting the genie back in the bottle: no matter where Brazil’s Lava Jato investigation goes, the public has shown that it will no longer tolerate the old cronyism between oligopolies and politicians. Furthermore, the pace at which anticorruption gains accumulate may be faster in the twenty-first century than it could be in the nineteenth and twentieth. Countries as diverse as Georgia and Rwanda have made remarkable gains on most measures of corruption in the space of the past two decades. They have done so by drawing on a large set of international best practices, simultaneously improving transparency, oversight, institutional effectiveness and the likelihood of sanction. Latin American democracies that are already implementing such anticorruption strategies may also be able to benefit from vibrant political competition, which lessens oligarchic politics and increases the practical autonomy of courts and prosecutors, and a vibrant press, which has proven essential to uncovering wrongdoing and mobilizing civil society. Finally, the international anticorruption framework is much stronger than ever before—the record-breaking Odebrecht settlement with Swiss, Brazilian, and U.S. officials being only the latest example—which enhances global support for reformers while increasing the likely international penalties against potential bribe-takers. So although the path to improvement will be a long one, it may be possible for Latin American reformers to move more quickly than was possible in the not-so-distant past. That alone is grounds for optimism, although a healthy dose of realism is also needed in the face of widespread pushback from the guardians of the status quo.   [i] Glaeser, Edward L., and Claudia D. Goldin. Corruption and Reform: Lessons from America's Economic History. Chicago: University of Chicago Press, 2006. Hofstadter, Richard. The Age of Reform: From Bryan to F.D.R. 1966 ed. New York: Alfred A. Knopf, 1955, p.3. [ii] Rothstein, Bo. "Anti-Corruption: The Indirect 'Big Bang' Approach." Review of International Political Economy 18, no. 2 (2011): 228-50

Last year was momentous for the breadth and depth of corruption revealed globally. Among the many remarkable events of 2016, the massive Panama Papers release, the multinational Odebrecht settlement, and Global Witness’ Undercover in New York investigations were all remarkable for pointing out the depth and breadth of international corrupt networks, and the degree to which they pass through a variety of jurisdictions, including—most notably—the United States. If 2016 was the year of bombastic revelations, 2017 seems to have brought growing consensus about how to fight transnational corruption, especially grand corruption and kleptocracy.  Kate Bateman and Charles Davidson recently expressed the emerging consensus about reforms that the United States might undertake, including:  Limit anonymous “shell” companies, which hide the identities of true beneficial owners and permit corrupt actors to “move and hide assets, launder money, and evade law enforcement”; Halt anonymous ownership of real estate in the United States, which has too often turned a blind eye to the kleptocrats in our midst; Tighten the enforcement of the Foreign Agents Registration Act; Use emerging bipartisan congressional support for anticorruption efforts to invest in greater U.S. government capacity to tackle international corruption by the Justice, Treasury, and State Departments; The first two recommendations, particularly, seem to be generating widespread support—including in Congress. One anonymous author was so expectant of change as to pen a book entitled “Offshore Apocalypse,” predicting the end of the offshore banking business. But this seems far too optimistic. The Trump Organization is reported to be doing more business than ever with shell companies, raising questions about the administration’s willingness to clamp down. Congress is not exactly a well-oiled legislating machine, so adding one more project to the dauntingly crammed legislative agenda may be a non-starter. Further, when it does act, Congress seems to be moving backward on anticorruption: one of legislators’ few achievements this year was to roll back the Cardin-Lugar provisions in section 1504 of the Dodd-Frank Act, which had required U.S. oil and gas companies to disclose payments to foreign governments. And of course, certain U.S. states rival Panama in the opaqueness of corporate disclosure requirements, suggesting that their representatives may not sign on to transparency-enhancing legislation. There are practical problems, meanwhile, with limiting shell companies and anonymous ownership, including the simple fact that even legitimately named owners are often hard to link to the political actors and prominent business leaders that may be a source of their wealth. If a beneficial owner is a relative of a major political figure but has a different surname, establishing key links across layers of international jurisdictions and legal entities that are purposely created to obfuscate the proceeds of corruption will still be a daunting task. This is particularly the case because there is so much illicit money sloshing around the world: the law firm at the heart of the Panama Papers, Mossack Fonseca, alone was responsible for creating 214,000 offshore accounts, a huge haystack for investigators to dig through. What is to be done? As an innovative recent paper by Mike Donaldson[1] points out, the ethical rules for lawyers do too little to prohibit U.S. lawyers from helping their clients to break the laws of foreign jurisdictions. In part because lawyers are trained to believe that everyone deserves legal advice and in part because the rules are not focused on what may happen outside the jurisdiction where a lawyer practices, there is not clear guidance—for example in the American Bar Association’s Model Rules of Professional Conduct—that would unambiguously prohibit American lawyers from assisting a client in a breach of foreign law. In addition, these Rules suggest that if a lawyer only reasonably believes (and doesn’t know for certain) that a client is breaking the law, she is entitled to continue acting on their behalf. And ABA Rules don’t explicitly require lawyers to ask enough questions in suspicious circumstances, such as the embarrassing scenes in the Global Witness videos when only one of thirteen New York lawyers immediately refused to help the supposed representative of a dubious foreign government official bring highly suspect money into the U.S. Donaldson offers a number of commonsense solutions for tightening the existing ethical rules of the legal profession to make it harder for lawyers to help suspicious transactions – or to phrase it another way, to help honest lawyers push back against pressure to take on bad business. There is, of course, a reasonable case to be made that we can’t expect U.S. lawyers to know the applicable laws of all global jurisdictions. But in a world in which offshoring and shell companies increasingly look ethically indefensible, perhaps a combination of greater awareness of the costs of international corruption, increasing harmonization of international anticorruption law, and tighter ethical standards for lawyers can contribute to moderating corruption’s terrible human costs. [1] Donaldson, Mike. “Lawyers and the Panama Papers: How Ethical Rules Contribute to the Problem and Might Provide a Solution,” Law and Business Review of the Americas, 22:4 (Fall 2016), 363-382.

Amid all its diversity, Latin America has never mattered more for the United States. The Western Hemisphere is now indelibly tied through commerce, energy, people, and politics. This blog aims to make sense of the political, economic, and diplomatic currents in the region, as well as its at times friendly and at times fractious relations with the United States.

Last week marked the anniversary of the Monroe Doctrine.  Today marks the anniversary of the Roosevelt Corollary to the Monroe Doctrine.  Although presented at the time as an extension of what Monroe had proposed 81 years earlier, Theodore Roosevelt’s December 6, 1904 message to Congress actually stood the Monroe Doctrine on its head. The background to the Roosevelt Corollary was fiscal instability in the Caribbean.  Various Latin countries had borrowed more from European creditors than they could afford.  When they defaulted, the creditors turned to their home governments to protect their investments.  These were the days of gunboat diplomacy, as Europeans dispatched their navies to collect on debts.  In 1902, the British and German warships seized Venezuela’s dilapidated “navy,” blockaded its ports, and even bombarded one of its towns when Caracas refused to pay up. What steps Roosevelt took to try to dissuade the British and Germans are a matter of debate.  But the prospect of further European military activity in the Caribbean worried the hero of the Battle of San Juan Hill.  He had visions of European powers establishing naval bases in the Caribbean, threatening his dream of a canal across Panama as well as diminishing American influence in the region.  So when the Dominican Republic stopped payment on its foreign debt in 1904, he asserted that the United States had both a right and duty to intervene in Latin America to preserve order and prevent European intervention. Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society, may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power…. We would interfere with them only in the last resort, and then only if it became evident that their inability or unwillingness to do justice at home and abroad had violated the rights of the United States or had invited foreign aggression to the detriment of the entire body of American nations. It is a mere truism to say that every nation, whether in America or anywhere else, which desires to maintain its freedom, its independence, must ultimately realize that the right of such independence can not be separated from the responsibility of making good use of it. In staking out a new role for Washington as the policeman of the Americas, Roosevelt denied that “the United States feels any land hunger or entertains any projects as regards the other nations of the Western Hemisphere.” Motive aside, Roosevelt had transformed Monroe’s original principles, which had sought to protect Latin America from intervention abroad, into an argument justifying American intervention in Latin America. The interventions would come. Roosevelt directed U.S. officials to take over the job of collecting customs duties for the Dominican Republic and paying off its debts. (For most countries at the time the taxes paid on imported goods were the major source of government revenue.) Roosevelt would later quip that “The Constitution did not explicitly give me the power to bring about the necessary agreement with Santo Domingo. But the Constitution did not forbid me.” Roosevelt’s successors would play the policeman’s role even more vigorously. Over the next three decades, the United States would send eight expeditionary forces to Latin America, take over customs collections twice, and conduct five military occupations—three of which (Nicaragua, Dominican Republic, and Haiti) lasted more than a decade. Most Americans don’t recall these interventions; many in Latin America cannot forget them. Addendum:  In 2003, U.S. News & World Report selected Roosevelt’s Corollary to the Monroe Doctrine as one of the one hundred documents that shaped America.