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A REAL “Western Hemisphere Strategic Framework” — Instead of what we got…

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A REAL “Western Hemisphere Strategic Framework” — Instead of what we got…

Last week, the U.S. National Security Council (NSC) released its “Overview of Western Hemisphere Strategic Framework.” The release of the report coincided with U.S. National Security Advisor Robert O’Brien’s visit to Colombia. During the visit, O’Brien met with Colombian President Ivan Duque. (If you missed last week’s Week in Review, we covered some of the visit in more depth here.) O’Brien also announced that Colombia would function as a guinea pig for a U.S. attempt to catalyze sufficient private investment in Colombia so as to “incentivize near-shoring of U.S. businesses.”

When we heard the Trump administration was, at last, articulating a specific framework to buttress U.S. emphasis on making the Western Hemisphere a foreign policy priority, we were excited, not least because we have been talking about “near-shoring” as an inevitable byproduct of strained U.S.-China relations for over a year and been predicting an acceleration of near-shoring efforts as a result of COVID-19. The document begins promisingly: “The Western Hemisphere is a geo-political priority for the United States.” The superfluous hyphen can be forgiven; the significance of the U.S. shaping a more coherent strategic approach to fostering relations with its neighbors seemed a far more important prospect.

According to The Miami Herald, the new strategic framework is part of a “broader, classified national security strategy.” We sure hope so, because in the published NSC framework, it is all down-hill after the first sentence. The framework congratulates the U.S. for its commitment to “peace and prosperity” in the Western Hemisphere and lustily notes the region’s “abundant natural resources, including fuels and precious metals.” The document lays out five key goals: securing the homeland (an ironic place to begin a strategy about engaging other countries), advancing growth through the expansion of free markets, reaffirming regional commitment to democracy and the rule of law (by “restoring” democracy in Nicaragua, Cuba, and Venezuela), countering “malign” (read: Chinese) political influence from abroad, and “expanding the regional community of like-minded partners” (whatever that means).

In sum, the five-page document is little more than a mash-up of neoconservative delusions, imperialist envy for the region’s resources, and platitudes about democracy and the rule of law. The term “supply chain” appears all of one time in the entire document, a disappointment for any U.S. company hoping to see tangible U.S. support to relocate these all-important arteries of global trade. If anything, the lack of self-awareness about the history of U.S. engagement in the Western Hemisphere, especially in Latin America, probably causes more problems than it solves. We have long been critics of China’s Belt and Road Initiative (BRI), in part because of how non-specific and amorphous Beijing’s actual plans are for Chinese President Xi Jinping’s signature strategic framework…but this new U.S. document is somehow even less clear than the BRI.

Rather than confining ourselves to wallowing in self-righteous indignations by cleverly critiquing the U.S. government, we thought it might be useful to take a stab at rewriting the first page of the “Overview of Western Hemisphere Strategic Framework” and to lay out some key principles businesses should keep in mind as near-shoring becomes a more enticing value proposition. This should be understood as our team’s first rough draft rather than a polished finished product, but even so, we think it offers some value for thinking about how U.S. engagement with the Western Hemisphere might evolve to the benefit of both.

The Western Hemisphere is a geopolitical priority for the United States.

The hemisphere is a diverse region and can be divided into multiple mental maps, each of which yields insights about the region. There is, for instance, a clear North America v. South America divide, and a distinct North/South political and socioeconomic experience in both. (Central America and the Caribbean deserve consideration as separate geopolitical entities all their own.) English-speaking America is profoundly different compared to Spanish-speaking or Portuguese-speaking America, not just in terms of language but in terms of culture, history, geography, and overall economic structure. Besides the North/South and Anglo/Latin America divisions, there are also distinct imperatives for Atlantic-facing countries and Pacific-countries. Both the North and South American continents are divided by mountains, jungle, or other difficult terrains. Challenges related to the rights of indigenous communities and the descendants of former slaves are endemic throughout the hemisphere and experienced differently within the region’s highly varied political systems.

The history of U.S. engagement with this part of the world has often fallen short of the U.S.’ stated political principles. Early in U.S. history, the 1823 Monroe Doctrine claimed the Western Hemisphere as a U.S. sphere of influence. “Manifest destiny,” the phrase most often used to describe U.S. imperialist ambitions of the 19th century, was not just a simple march through (and conquest of) Mexican territory to reach the Pacific. It also extended south, especially in the slave-holding south, which saw expansion as a geopolitical imperative.

After the Civil War extinguished the Confederacy’s explicitly imperialism aims, the Union continued with its own implicitly imperialist goals. Dollar diplomacy and U.S. industrial might often translated into heavy-handed intervention in and exploitation of Latin American countries. (Some readers might remember last week’s 1912 quote of then-President William Howard Taft: “The whole hemisphere will be ours in fact as, by virtue of our superiority of race, it already is ours morally.”)

During the Cold War, the hemisphere became an ideological battleground between the forces of global Communism and capitalism, and all too often, as in Chile, Argentina, Brazil, and Guatemala (to name just a few), the U.S. intervened to support dictators or military juntas lest Communism take root (or simply to defend U.S. economic interests).

Today, Latin America is widely considered the most unequal region in the world, a situation being exacerbated by the disruption caused by COVID-19. The region is also going in the wrong direction: after making some progress from 2002-2014, inequality began to widen again since 2016. South American economies, in particular, are still highly dependent on commodities exports; a recent United Nations Conference on Trade and Development (UNCTAD) study concluded that “more than half the countries in Latin America and the Caribbean (including all 12 countries in South America) were commodity dependent.”

Furthermore, the legacy of colonialism, while no doubt weighty, is not the primary reason for this state of affairs, as Latin America seemed to regress in the 20th century when much of the rest of the world was prospering. Governance is highly varied by region throughout the hemisphere, and the presence of corruption, transnational criminal organizations (drugs are a commodity too, and a profitable one at that), and weak institutions pose unique challenges to doing business in much of the Western Hemisphere below the Rio Grande.

For the U.S. to succeed in maintaining its global supremacy in its long-term strategic competition with China and in using its unique Western Hemispheric position to buttress a rules-based international order, the U.S. needs to marshal the resources of the Western Hemisphere and strengthen its relationships with its regional neighbors. The U.S. also needs those neighbors to become stronger in and of themselves. To do this, the U.S. must focus on four key areas.

  1. The U.S. must recognize the diversity of the Western Hemisphere and come to terms with the imperial baggage it carries in relation to many of its countries. Excessive dwelling on the past or indulgent victimization narratives are ultimately unhelpful, but so is a lack of U.S. self-awareness of the often-destabilizing role it has played in the region. A good-faith effort to rectify some of the wrongs the U.S. has played a role in furthering, whether by design or unwittingly, would help establish a basis of trust and respect with the region’s nations.
  1. The U.S. must make it clear that “their success is our success” – that any policy based simply on “America First” will fail as soon as another rival comes along promising to put “Argentina First” or “Peru First.” (China is already trying to do this and becoming an increasingly important economic partner for many of the region’s countries, like, for example, Argentina.) The Marshall Plan is a good model for the U.S. to follow, as it ensured the reconstruction of Western Europe after World War II as a reliable bulwark against Soviet aggression without fostering outright Western European dependency on the U.S. Latin America can realize its potential as a market and an economic bloc only if it is empowered (and if it empowers itself) to do so.
  1. The most valuable resource in the hemisphere is not the plentiful commodities with which it has been blessed, but rather its human capital. Development, education, and infrastructure have been neglected for decades, even centuries in some parts of the region. Free trade is not a panacea, and indeed, for some Western Hemispheric countries, could be counter-productive or even destructive. Rather than focusing strictly on free trade agreements, the U.S. should encourage selective protectionist policies designed to build domestic industrial bases throughout the hemisphere. A truly robust network of supply chains can only be cemented by political agreements, technology transfers, and robust public-private investment at a local level.
  1. Geopolitics is bad for business. The Western Hemisphere must be a geopolitical priority, but there are also contentious and conflicting geopolitical dynamics at play within the hemisphere itself. The U.S. can play a leadership role in resolving conflicts, building multilateral institutional frameworks based on shared interests, and enhancing connectivity between the entire hemisphere’s countries. Because of the region’s unique geography, shielded on both sides by two vast oceanscapes, the U.S. can focus on creating a bubble of peace and shared prosperity with a relatively small focus on military defense.

A key role model for the region to emulate is Taiwan, which combined smart government competition policy, aggressive internationalization, and investments focused on developing an independent innovation capability to become a global economic success story. Political stability in many countries throughout the region is lacking compared to Taiwan, but resource wealth and population size well exceed Taiwan’s. With help, political stability can be achieved, and U.S. policy might focus on making it easier for U.S. companies to do business in the region while also building strong political relationships on the ground. The scale of Latin America’s problems dwarfs Taiwan, but then, the U.S. does not have to worry about an ever-looming People’s Republic of China watching its every move.

None of this will be easy, and the U.S. must disabuse itself of the notion that it can snap its fingers and turn the Western Hemisphere into a well-oiled international supply chain machine overnight. It took decades to achieve the efficiency of supply chains in Asia and near-shoring will entail significant costs for U.S. businesses and consumers, as well as significant risks depending on the region, product, or supply chain in question.

The investment, however, will be worth it in the long-term, and is exactly the sort of thing the U.S. federal government is designed to do: to use the collective strength of the nation to make it easier for its citizens and companies to succeed at scale and on a more level playing field. China’s massive population in effect subsidized the most recent era of globalization. The U.S. can use its powerful and global influence to do the same in its own neglected neighborhood. At stake is whether the Western Hemisphere becomes a stabilizing political force in the global economy and a source of shared wealth and prosperity for all Western Hemispheric peoples and businesses…or a chessboard played upon by the world’s competing powers again.

We cannot change the past or even the present, but these are not chains, they are lessons. We are entirely in control of our actions in the future and of what the future shape and character of the Western Hemisphere might look like, if only we realize what is afoot and make up our minds in time.

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