The Monroe Doctrine Turns 200

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In this issue, you will find:

•The Monroe Doctrine Turns 200

•Ecuadorian President Noboa Breaks With the Right

•Panama’s Economy Withers Amid Mining Controversy

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The GCaM Team

•The Monroe Doctrine Turns 200
619 words | 3 minutes reading time

December 2 marked the bicentennial of the Monroe Doctrine, summarized under the famous slogan: “America for Americans.” Conceived by its defenders as an anti-colonial postulate, Latin Americans tend to approach it with cynicism, arguing the United States simply replaced previous imperial powers.

• The Monroe Doctrine initially maintained that the affairs of the entire Americas were the United States’ concern. Its purpose, which was never cloaked, was to reduce European influence in the New World, hence U.S. support for the remaining colonies’ independence.

• The Monroe Doctrine soon became a justification for American involvement in Latin America. Latin Americans are wont to note U.S. political and military interference, but investment and economic integration were just as important.

• In light of the region’s evolution and the end of the Cold War, it remains to be seen what the Monroe Doctrine means today. Since the 1990s, Washington’s Latin American policy has been somewhat erratic and lacking in direction.

It’s News. Senator Tim Kaine (D-Virginia) will soon visit Guatemala, where he intends to once again signal U.S. support for an orderly transition of power. Kaine will then travel to Honduras, whose government recently devised a questionable stratagem to take over the public prosecutor’s office, thereby earning Washington’s rebuke.

• The congressional delegation accompanying Kaine is exclusively composed of Democrats, among whom Delia Ramírez and Norma Torres, representatives for Illinois and California, respectively, stand out.

• Ramírez, born in Chicago, is the daughter of Guatemalan immigrants; Torres was born in Escuintla, roughly 45 miles from Guatemala City, and moved to the United States at age five. Both take an interest in Guatemalan affairs.

• Much like Ramírez and Torres worry about Guatemala, Congressman Mario Díaz-Balart (R-Florida) worries about Cuba. It appears most U.S. politicians interested in the region are themselves members of the diaspora; also crucial, and occasionally overlapping with the aforementioned group, are the State Department’s Latin America hands.

Why Does It Matter? Since the end of the Cold War, a lack of clarity has characterized Washington’s foreign policy vis-à-vis Latin America. The United States’ lack of a unifying vision has caused it to lose some ground in most Latin American capitals, where other actors and challengers have emerged.

• The first great loss was brought about by Hugo Chávez’s pink tide. With its nationalizations, notably that of Exxon’s Venezuelan assets, the leftist leaders of the 2000s achieved a substantial reduction in U.S. economic influence.

• While Washington mulled over its response, Beijing opened its checkbook. This is palpable in South America, where, except for Colombia, Venezuela and Ecuador, China has become the main trading partner.

• Yet U.S. politics is undergoing a transformation. Latin America remains a secondary concern, but the U.S.-China rivalry will force it to serve as a front in the commercial, technological, and ideological wars that are brewing.

The Balance. Mutual incomprehension nonetheless prevails. With the exception of Mexico, whose geography forces it to come to terms with Washington, few Latin American countries have understood the importance of immigration for the United States and how the border crisis may come to define the 2024 presidential elections.

• There is an indisputable conflict of interest. Most countries in the region, especially in Central America, benefit from migration; their economies could not survive without the foreign currency inflows provided by remittances, which make up close to 30% of their GDP.

• Similarly, while U.S. officials lament growing Chinese influence, they have failed to respond in kind. Last month, for example, the Partnership for Economic Prosperity in the Americas held its inaugural summit; the investments promised are in the few millions of dollars, although the White House intends to encourage private U.S. investment.

• U.S. policy in the region remains essentially political: Washington defends the reigning ideology and sanctions its opponents. However, the region must be prepared to settle disputes and take advantage of opportunities—like nearshoring—that will arise.

•Ecuadorian President Noboa Breaks With the Right
600 words | 3 minutes reading time

Ecuadorian President Daniel Noboa, who took office on November 23, is accused of “treason” by the right. The president has effectively banished his vice president, Verónica Abad, who is to serve as a “collaborator for peace” at Ecuador’s embassy in Tel Aviv. 

• The vice president’s hands are tied. If she does not comply with her orders, Ecuadorian law allows her to be dismissed for insubordination. This would hardly constitute a break with tradition: former President Lenín Moreno had four vice presidents.

• Abad accepted her orders with a dash of cynicism, adding that, given the United States’ inability to guarantee peace in the Middle East, it was a tall order for Ecuador to achieve it.

• To be frank, Israel-Ecuador relations are of very little importance. The Ecuadorian embassy in Israel consists of four officials and no ambassador. In 2021, bilateral trade was valued at a mere US$49.86M.

Between the Lines. The 36-year-old president is the son of banana magnate Álvaro Noboa, a six-time presidential candidate. Born in Miami, he is an NYU Stern and Kellogg graduate, both useful elements in portraying himself as a non-ideological technocrat capable of tackling crime and getting public accounts back on track.

• Fashions have shifted: the scions of great families are not necessarily right-wing. Noboa is not like his father, who campaigned with the Bible in hand; he deems himself a center-leftist and claims to have been a vegetarian.

• His supposed leftism is a political ruse. Noboa intends to break with the pro- and anti-Correa dichotomy that dominates Ecuadorian politics. His concerns are, above all, economic, as shown by his enthusiasm for tax reforms.

• Differences between Noboa and the vehemently conservative Abad have been noticeable since the campaign. Abad defends the privatization of healthcare and education, positions that could harm Noboa’s reelection goals. 

Panorama. Noboa’s alliances demonstrate his chameleonic nature. Given his poor showing in the legislative elections, he was forced to seal an agreement with Citizen Revolution, former President Rafael Correa’s party, as well as the right-wing Christian Social Party. Committee assignments were apportioned among the coalition partners.

• Naturally, Noboa is suspicious of his allies, hence his insistence on having his party lead all the parliamentary committees with an economic remit. To achieve this, he was forced to sacrifice seats in other committees.

• The fragile coalition is nonetheless necessary for Noboa, whose party only controls 17 of the 137 seats in the Assembly. The alliance’s strength will be tested once Noboa submits his “urgent” reforms for consideration.

• Before the end of the year, the president plans to send his fiscal and energy reforms to the Assembly. The details of both bills are still unknown; a state of emergency will be declared to speed up the process and address the country’s stratospheric crime rates.

The Balance. One should recall that Noboa rose to power only after President Guillermo Lasso, facing impeachment, dissolved the National Assembly and called a snap election. Time is of the essence for the young president, who was elected to finish out the 18 months remaining to Lasso’s term.

• Noboa exemplifies the regional tendency towards leaders with an undefined ideology. By virtue of not being a correísta, he was assured of the support of the right in the last elections; now he intends on winning over the left.

• He could try to imitate the path marked by Nayib Bukele, who started on the left and then became a chic hegemonic figure who boasts of his bilingualism and administrative efficiency.

• Yet Noboa’s task is extraordinarily complex, perhaps more so than Bukele’s. He faces a very high debt burden, as well as an elaborate system of state subsidies that is as financially unsustainable as it is politically impossible to reform. 

•Panama’s Economy Withers Amid Mining Controversy
592 words | 3 minutes reading time

On November 28, Panama’s Supreme Court ruled the country’s contract with First Quantum Minerals unconstitutional and ordered the immediate closure of the Cobre Panama mine. The mine had already suspended operations after protesters kept it from acquiring fuel to run its power generators.

• The Court’s judgment marks an absolute victory for the protestors, who have paralyzed the country for over a month, with daily losses estimated at $200 million. Demonstrations have been held to celebrate the ruling. 

• The ruling also seals President Laurentino Cortizo’s (PRD, center-left) defeat. After all, his party’s legislators were behind the contract’s fast-track approval, despite protestors’ calls for a deeper review.

• It is unlikely that the profoundly unpopular governing party will recover before next year’s elections, which are scheduled for May 5. Panama prohibits immediate re-election, so Cortizo will not be affected by his party’s fortunes. 

Data. The Supreme Court’s decision enjoys widespread support, but it could leave the Panamanian economy in dire straits. Until recently, the Cobre Panama was responsible for around 1% of global copper production; it was perhaps the most buoyant feature of Panama’s economy. 

• The state will have to countenance the loss of $375 million in mining royalties. Some 40,000 direct and indirect jobs enabled by extractive operations are also at risk; 7,000 of First Quantum Minerals’ Panamanian employees were furloughed the day before the ruling.

• The mine makes up 4.8% of Panama’s GDP, as well as 75% of the country’s locally produced exports. Since drought and the effects of El Niño have led to losses of $200 million in the Panama Canal, mining revenue was considered particularly important this year. 

• Before this crisis detonated, mining was seen as the country’s most promising industry. The government has already slashed its 2024 forecast: growth, previously expected to hit 5%, will amount to a mere 1-2%.

Why Does It Matter? First Quantum Minerals’ reaction was immediate. The company, headquartered in Toronto but with some South Korean capital, had threatened international arbitration. It argues that Panama has walked back on its commitments, since the contract had been enshrined under Law 406.

• Given the circumstances, the current scenario is the best possible one for the country. Since the Supreme Court ruled Law 406 unconstitutional, it could be argued that there has been no breach of contract. Panama would have a much weaker case if its legislators had simply repealed the law.

• Be that as it may, First Quantum, which says it has invested $10 billion in Panama in the past 25 years, sued Panama in Miami and Toronto. The billion-dollar question is how much Panama will have to pay.

• Some speak of dizzying figures: $50-100 billion. These estimates are overeager: figures between $7 billion and $15 billion are more likely—and still ruinous for a country of Panama’s size and prospects.

Regional Echoes. The crisis in Panama was born of resentment towards a political elite deemed distant and corrupt; it is unlikely that the economic consequences had been foreseen. Additionally, Panama has demonstrated the growing political importance of environmentalism, even in countries that can ill afford it. 

• A few months ago, for example, Ecuador held a plebiscite to decide whether to ban oil extraction in a section of the Yasuní National Park. The green option won with 54.11% of the vote.

• Colombia’s government is hostile to all extractive industries. President Gustavo Petro has penalized the state oil company, Ecopetrol, through an ill-advised tax reform. Last quarter, the firm’s revenue fell by 46.5%.

• Across Latin America, where green politicians are necessarily anti-mining, few acknowledge that if an energy transition is truly carried out, it will lead to a mining boom, especially for copper, nickel, and lithium.