The Rise of Las Américas in the 21st Century

Panamá City Skyline in the 21st Century

The Decade of América Latina

The market orientated reforms of the 1980s and the 1990s combined with several years of commodity-driven prosperity have been transforming América Latina into a region of wealth and prosperity over the last decade. The commodity boom together with more progressive social policies has started to create more dynamic and less unequal societies across the region.

Thanks to the commodity boom and rising revenues, governments have presided over a time of rising incomes for the new emerging middle classes in many countries in América Latina. However the increase in wealth has been occurring against a background of an ideological battle between reformers (mostly liberals and social democrat politicians) and those such as Mr Chávez (Venezuela) and potentially President Christina Kirchner (Argentina) and others of the ALBA grouping who would rather return to the authoritarian and populist past. At present the reformers appear to be winning the debate. This is illustrated below in the Economist's Latinobarómetro published in October 2011. Even so there has been a slight fall in optimism over the last year. This chart clearly shows Panamá with the most ongoing optimistic outlook. 

Latinobarómetro Source: The Economist Oct. 2011

 

What of the northern neighbours – the US

The US, América Latina's northern neighbour on the same continent has so far failed to appreciate the rising importance of América Latina with its expanding market for the north's exports, its huge investment opportunities, its enormous reserves of energy and minerals and its continuing supply of needed labour. However at the same time and despite their recent growth and globalisation, the economies of América Latina still depend on the US for capital, know-how, technology and remittances.

If geography is destiny and the US and América Latina need one another so much, the obvious question is why are the two not pursuing a more joint approach to consolidate their relations in a meaningful way? The answer to this question turns on key policy differences on three main areas. Firstly, immigration, many in América Latina find the idea of building a wall between the México and the US particularly offensive. Secondly, the war on drugs, the North's war on drug trafficking serves mainly to spread corruption, increase criminal violence and generally undermine the rule of law. Finally, the embargo on Cuba imposed by the US is seen as counter-productive and likely to have prolonged the repressive rule of the Castro brothers rather than ending it. However none of these policy issues is easily resolved due to domestic US politics and less so in an election year. Immigration has been a particularly toxic issue in the Republican primaries. To make progress in the war on drugs, the US needs to curb demand for illegal narcotics at home, but US politicians are loathe broach the the idea of decriminalisation. And the Cuba policy is held hostage by the swing state of Florida and its residents of Cuban origen.

Panamá, the Singapore of the Americas

Panamá is the success story of the first decade of the 21st century. Business of all kinds continues to grow, in a land coveted in the late 17th century by the pirate Henry Morgan and occupied since the beginning of the 20th century by the US President Roosevelt, to build the Panamá canal and link the Pacific with the Atlantic on the narrow isthmus. During many decades, the country has served as a hiding place for multiple legal and illegal dealings, from drugs to weapons and political conspiracies and money laundering.

Nevertheless the Panamá of the 21^st century has many feathers to its bow: a chanel, an international banking center, the world's first merchant fleet, a free trade area which is one of the main bases for the collection and re-export of inland freight, an interoceanic railway, seven private ports and dozens of casinos and property developments (as the above picture shows). Panama in 2011 was placed at the head of economic growth in Las Américas, an increase of 10.6pc of GDP, against 9.2pc in 2010, according to the Statistics and Census Institute (INEC) of Panamá which likely explains the optimism in the Latinobarómetro above too. 

But the Elephant in the room is still... la droga

US President Nixon declared the war on drugs 40 years ago, interestingly the front that he opened in 1971 has survived all his successors up until now.

The Presidents of Brazil, Colombia and Mexico were the first to speak out on the failure of the war on drugs, Fernando Henrique Cardoso, Cesar Gaviria and Ernesto Zedillo respectively. Recently, the current president of Guatemala, Otto Perez, and the former President of Colombia, Juan Manuel Santos, have also spoken out to demand the opening of a debate on the decriminalization of drugs using the legitimacy granted to countries suffering the most tragic consequences of victims of the war on drugs. Honduras topped the global homicide rate, with 82.1 homicides per 100,000 population, followed by El Salvador. México has also been immersed in the drug war for the last six years, with almost 50,000 people dead and the homicide rate has increased by 65% since 2005 according to UN data.
 

The legitimacy of key leaders of América Latina speaking out, coupled with the figures of the dead has forced the US president, Barack Obama, to finally address the issue. In the US in April 2012 Obama said "We recognize our responsibility in this matter and I think it is entirely legitimate to engage in a discussion about whether the laws now in force are laws that perhaps are causing more harm than good in some areas." When Obama spoke, everyone understood: it is time to talk about drugs. The issue that is a constant drag on América Latina has finally reached the international agenda, a further sign of the América Latina's rise. 

 

Here comes Iberoamérica - a new regional power in 21st Century

Leaders arriving at the CELAC Summit in Caracas, Iberoamérica

The 33 Heads of State of the Iberoamerican countries met in Caracas at the beginning of December 2011, when they left they had created a new International Forum for Integration for Iberoamérica called  Comunidad de Estados Latinoamericanos y Caribeños (Celac). This organisation excludes the US and Canada and its main objective is to build its own financial architecture that will protect it from the financial crisis that has hit the US and Europe. The new CELAC bloc accounts for a population of around 550 million people with high GDP (PIB, Producto Interior Bruto) growth rates as the diagram below shows:

The idea to found a new Comunidad de Estados Latinoamericanos y Caribeños has come about over the last three years. Just when the markets were beginning to crumble in December 2008, the then, President of Brasil, Luíz Inácio Lula da Silva, called the Presidents of the 33 countries to the first Summit, Cumbre de América Latina y en el Caribe (Calc) to discuss strategies to safeguard the region against the financial crisis. Later in February 2010, the Calc met again in Cancún, México and it was there that they agreed that they needed a permanent forum for discussions, hence the birth of Comunidad de Estados Latinoamericanos y Caribeños (Celac) at the end of 2011 in Caracas. 

As well as discussing the financial crisis, the Presidents of Estados Latinoamericanos y Caribeños also discussed other business related to the cohesion and stability of the region. President Evo Morales asked for support for Bolivia to reach an agreement for sea access for his land-locked country. The President of Colombia, Juan Manuel Santos, advocated for a common policy to rid the region of narco-trafficking. 

Español, common language of the 21st century

The potential of español as a world language is increasingly based on its great diversity. The hybridisation of español in so many countries is becoming a major advantage in a globalised world. At the beginning of the 21st century, many believe there is a renewed "Siglo de Oro" in the Spanish language, partly because there has never been so many people writing in Spanish and writing in such an interesting way. The existing prejudices between Iberoamérica and Spain are being broken down and eliminated and a new common linguistic territory is being created in español. Evidence of this is the founding in 2011 of Amazon.es, selling books, DVDs and other products to the increasing market of Spanish speakers worldwide. Amazon (and its Kindle e-reader) already has plans to enter Chile, Argentina and Brazil too.

Interestingly, speakers of español are not limited to América Latina and Spain, instead within the EU (excluding Spain) there are 30 million Spanish speakers. Currently in the US, there are 40 million Spanish speakers and in Brasil, 5.5 million Spanish speakers. The US is further predicted to be the world's largest Spanish speaking nation by 2080 according to recent studies.

The recently celebrated XXV Feria Internacional del Libro de Guadalajara, México in 2011 celebrated its 25th anniversary  with a list of 25 secretos literarios de América Latina. In the video below, the writer, José Saramago, explains in his own words the importance of the cultural and commercial exchanges already taking place within the Iberoamérica region in the 21st Century.

China gets new Dry Canal through Colombia – its own strategic route across the high seas

New Chinese Dry Canal rail-link between Pacific and Atlantic Oceans

China is in advanced talks with the Colombian government to build an alternative to the Panama Canal. China is leading the world in one of the biggest strategic projects of the 21^st century, one that will link the Atlantic and Pacific oceans, again.

For centuries, visionaries dreamed of uniting the Atlantic and Pacific oceans by forging a path across Central America's slender isthmus. This single, ultra-strategic waterway, transformed the commercial map of the world. It not only lopped 7,000 miles off the New York-to-San Francisco shipping route avoiding Cape Horn, but also brought Europe much closer to Asia.

Today, something new and equally dramatic is happening. China's Development Bank is preparing to invest $US7.6 billion to build a whole new rail-road Dry Canal on the Colombian side of the isthmus for the China Railway Group to ship goods from Asia to the Atlantic side of the fast-growing Latin American continent.

The new 220km Dry Canal rail link would run from Cupica on the Pacific (involving the expansion of the Port Buenaventura) to a new port Uraba near Cartagena on Colombia's Atlantic coast. Imported Chinese goods would be assembled for re-export through the Americas and beyond, with Colombia-sourced raw materials filling ships making the return journey to Asia. This would give China its own 50m-tonne-per-year trade conduit avoiding Panama's US controlled pinch-point.

In 2011, the Panama canal carries 300m tonnes of shipping annually – compared to the 80m it was designed to accommodate. Since it was built world trade has expanded enormously. Large modern cargo ships, including LNG gas vessels, simply cannot fit through which is why the canal's vast lock gates are currently being widened.

Growing Influence of Latin American countries

China has established a new Strategic partnership with Colombia and the wider Americas region filling a vacuum in the breakdown in US-Colombia relations in recent years underlined by the US string-along-and-dither policy on whether to sign a free-trade pact with Colombia.

There is a possibility that the rail links may extend through Venezuela to give it access to the Pacific and greater clout, and Brazilian companies may bid for some contracts.

Colombia is the world's fifth largest producer of coal - currently most of it is exported from Atlantic ports to the US and Europe. The new Dry Canal rail-link would open up options for Latin American countries to export such resources, via Pacific ports, to Asia and China.

The Panama Canal

The Panama Canal was and perhaps remains, one of the greatest feats of engineering in human history. Once completed, the canal effectively ended the imperial battle of trade routes and did so in America's favour when it opened in 1914. The symbolism of the First World War breaking out in Europe while the 'New World' took control of the seas was unmistakeable. The symbolism is equally clear 100 years later emphasizing the might of China's modern-day economic and commercial power.