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**Latin America 2020: Discussing Long-Term Scenarios\
**

Summary of conclusions of the workshop on Latin American Trends\
Santiago de Chile, 7‑8 June 2004\
for the\
National Intelligence Council *Global Trends 2020* *Project*[^1]

Final Report

Participating organizations:\
Georgetown University (Washington)\
Centro de Estudios Nueva Mayoría (Buenos Aires)\
Universidad Adolfo Ibáñez (Santiago de Chile)

#### Latin America 2020

As viewed from the early 21^st^ century, the prospects for Latin America
in 2020 will be a mixture of lights and shadows. In recent years, Latin
America has improved in terms of democratization, some institutional
development and a broad consensus on the virtues of financial stability.
But the region has also experienced poor social results, inconsistent
economic growth, deep loss of legitimacy of its political players, and
declining international relevance. At the outset of the new century, the
political order of Latin American societies faces new crises.

In fifteen years' time, Latin Americans will be both more mature and
more cautious in terms of democratization and macro-economic policies,
but they will struggle with social problems, low institutionalization
and recurring governance crises. Few countries will be able to take
advantage of opportunities for development, and Latin America as a
region will see the gap separating it from the most advanced nations of
the planet grow wider. Some situations will improve but always within a
cycle of oscillations, progress and setbacks. And those countries and
regions that fail to find an economic, political and social direction
will be immersed in crises and will experience reversals. All this will
take place within the framework of mounting regional heterogeneousness,
in which relations with the United States and the quality of domestic
democratic governance will mark the great differences among Latin
American countries.

This report intends to offer some views on the prospects of Latin
America over the next fifteen years. It is divided in two parts. The
first part identifies a set of 'drivers' (influence factors and agents
fostering change and evolution in the region) and studies their meaning
within a forward-looking exercise. We find that democratic governance
and the quality of institutions; the region's international
insertion---including its relationship with the United States and the
main world powers---and the region's sense of security from new threats
are the main, though not the only, factors determining the future of
Latin America. In the second part, long-term scenarios and trends for
Latin America are outlined based on the above-mentioned definitions.

**[1. Main 'drivers' in the outlook for Latin America in
2020]{.underline}**

**1.1. Institutions and governance (at domestic and international
levels)**

The democratic rules of the game to gain access to power (free and
reasonably competitive elections) prevail in the region today, except
for Cuba and Haiti. This trend, which entails the end of military coups
and authoritarian regimes, has taken hold over time. However, 25 years
after the global democratization process (the "Third Democratic Wave")
changed the continent's political map, the Latin American democracies
have shown growing differences with the longest-running democracies of
North America and Europe. The political institutions, the rule of law
and the level of accountability fail to work effectively and meet
citizens' expectations.

The democratic leaders of the region face serious problems when trying
to reform the state, enforce modernizing public policies, or reduce
growing unemployment and poverty in most countries. This persistent
obstacle to governments' performance, within a framework of mediocre
economic growth rates, has eroded the Latin American states' ability to
satisfy demands and guarantee the basic needs of the population.

In many cases the democratic governance crises have led to political
instability, hastening the collapse of sitting presidents. Latin
American "presidentialism"---a constitutional phenomenon with strong
cultural roots---provides few tools with which to overcome such
instability.

In addition, new forms of political crises are likely to appear in the
years ahead. The political parties face crises of a different order
throughout the region, and some party structures will disappear. Popular
disaffection, social fragmentation, and the failure of existing
structures to absorb sectors demanding inclusion (such as the mobilized
indigenous groups) will have negative effects on politics and
governance. The weakness of political parties---instead of leading to
the emergence of new groups---will favor phenomena such as
"mobilizationism," videopolitics, the emergence of charismatic leaders,
and the mounting influence of societies' "de facto powers" (*los poderes
fácticos*, including elites, media, business groups, military, criminal
organizations, etc.) in electoral contests.

Another aspect of democratic governance in the next 15 years will be
governments' ability to introduce the economic reforms and policies
necessary to anticipate the economic problems of the future. The fragile
fiscal sustainability of the countries in the region and the volatility
of investment cycles suggest the need for tax reforms and anti-cyclical
policies, raising questions about the future ability of Latin American
countries to prevent future economic crises.

**1.2. Relations with the US**

For the next 15 years the United States will remain the leading force
behind globalization and main player in the Hemisphere. The kind of
relationship that Latin America forges with the United States will be a
key factor in regional development. But the road to a beneficial
relations between the United States, the region as a whole, and most
individual nations will not be free of hurdles. In the years ahead,
Latin America's agenda with the United States will compete more than
ever against that country's own global agenda (including anti-terrorism
and the emergence of other regions of worldwide importance), placing
Latin America on the back burner of Washington's priority list. The
ability of Latin American elites to articulate national interests and
Washington's will to integrate with the region will be decisive in the
future relationship.

The combination of these factors will cause heterogeneousness among
Latin American countries: some will be more or less economically and
politically integrated to the United States. The informal border of the
Panama Canal will be deepened; countries to the north will be more
influenced by the American evolution, whereas those to the south will
strengthen their subcontinental identity---especially as Brazil aspires
to regional leadership.

Some phenomena, such as demographic change in the United States, will
result in closer ties between the United States and several Latin
American countries. If in the second half of the 20th century, US
foreign policy towards Latin America was basically reactive, the bond
over the next 15 years will be shaped by the new reality of its
population: the United States is on its way to becoming a country with a
considerable proportion of "Hispanic" population. This rise of
"Hispanics" in the US population will influence the United States and
its leaders as well as US relations with Latin America. It will
encourage growing cultural, political and economic interaction with
Latin America, particularly with the set of countries spanning from
Mexico to Colombia, from which most of the future citizens and
Hispanic-American voters are likely to come.

Nonetheless, trends in the opposite direction will also appear. Within
the United States, trade integration projects with Latin America---FTAA
and others that may emerge---will gather little support from the private
sector. Except for cases of specific sectors and countries, the advances
in trade openness (exports from Latin America to the United States) in
the next 15 years will require a political push to overcome disinterest
within the US private sector. Likewise, within the framework of the
domestic security agenda that will continue to play a central role in
the US policies, aspects of great interest to Latin Americans in the
United States (migration, visa and residence policies, or remittances)
could be subject to regulatory tightening. This does not mean relations
between the United States and the region will deteriorate as a result of
growing nationalist or ethnic tensions (which appears highly unlikely).
But both factors---private trade disinterest and domestic security
regulations---could become forces counteracting the advantages of the
growing "hispanicness" of the United States by 2020.

In sync with this phenomenon, not all Latin American countries will
share the same will to integrate with the United States. In some cases,
geographical location and the predominance of political leaders pushing
for more interaction with the United States will continue generating a
long-term desire for integration. But in other cases, like Brazil, the
desire to build a regional profile, thereby reducing interaction with
the United States, comes precisely from a consensus among that country's
leaders. In many cases, different levels of "resistance" to US influence
on the part of Latin American populations will end up dragging their
leaders to a policy of distancing and mistrust of the United States. In
yet other cases, the resistance to greater integration will result from
the view of the political and intellectual elites. Marred by enough
problems of its own, Latin America as a region will have difficulty
understanding a US political agenda focused on domestic security and the
"war on terror."

**1.3. Challenges to security**

In the next 15 years Latin America will continue being the region with
the lowest relative exposure to the world conflicts of the 21^st^
century, which have their axis---according to some analysts---on a
"clash of civilizations" and terrorist tactics as the main strategy of
fundamentalist groups. Compared to the scenario faced by other regions,
Latin America will be relatively peaceful in the years ahead. Border
conflicts and territorial claims will exist---there are still over 20
unresolved territorial conflicts in the Latin American continent, many
of which will be tackled in the next 15 years---but a scenario of armed
confrontations is unlikely. The advance of democratization and trade
integration, despite all the remaining problems, set strong trends
mitigating the threat of interstate wars and even conflict involving
non-state actors, such as irregular armed groups or mafias.

Likewise, a series of transformations in international security on a
global scale, such as multilateral efforts for conflict resolution, will
have a positive effect on Latin America in the next 15 years in a direct
manner.

However, some trends involving internal conflicts will prevail and, in
some cases, produce international repercussions and involve
extra-continental axes---as happened during the Cold War. Many of these
conflicts will be related to non-traditional threats. The remnant
guerrilla structures (Colombia is the most serious case but not the only
one) will not be easily dismantled by nation-states, and effective
international action against such threats are not likely to materialize
in the next few years. However, in a 15-year perspective, the
continental institutional evolution in terms of regional security could
begin to provide the mechanisms to militarily confront the armed
conflicts within national borders. Otherwise, the *poderes fácticos* and
non-state armed players (mafias, drug-traffickers, and international
terrorist groups) both will seek partnerships or mergers---or at least a
*modus vivendi*---with irregular armed groups in the region.

Based on this scenario, the effects of which are already appearing and
could increase in the coming years, the nexus between domestic
governance and international insecurity of the region will escalate.
Areas without states' full control (the departments of Boyacá, Caquetá
and several others in Colombia; the Venezuelan-Brazilian and
Venezuelan-Colombian borders; areas of Cochabamba in Bolivia; the coasts
of Haiti, etc.) will be prime areas for this type of alliance.

The emergence of politically organized indigenous groups may also entail
a risk to regional security. If in the years ahead the indigenous
movements do not attain a legitimate role in the political system and
certain levels of social inclusion, then many are likely to resort to
claims of territorial autonomy (rather than insertion in national
politics), as happened decades ago in the Nicaraguan Atlantic coast, in
the south of Mexico, the Andean region, and some Central American
nations. Territorial claims driven by irredentist indigenous groups
could set the stage for armed insurgency and political violence.

Another factor that will grow in importance in the next 15 years is
public insecurity in large cities. Insecurity and crime indicators have
shown an upward trend for many years, reflecting the increase in poverty
and inequality in most of the countries. Personal insecurity will be a
leading issue in Latin American societies and elections: this phenomenon
will give "heavy-handed" politicians and candidates access to
mayoralties, governorships and presidencies in the region.

**[2. Other "drivers" in the Latin America 2020 outlook]{.underline}**

**2.1. Population and Society**

Currently, the Latin American population accounts for 8 percent of world
population. Demographic projections anticipate that the figure could
drop slightly in the next 15 years because the regional birth rate
exceeds that of the OECD countries but is lower than that of other world
regions. However, economic forecasts indicate that Latin America's share
in the world's GDP is poised to decrease as a result of the *low growth
rates* (as seen in recent years) and the *drag* it will entail in
productivity and installed capacity. All of this evolves within the
framework of growing inequality among countries at the global
level---and among countries at the Latin American regional level.

WORLD POPULATION PROSPECTS BY REGION (in thousands of people)

  ------------------------ --------------- --------------- ---------------
  **REGIONS**              **2000**        **2010**        **2020**

  Total population         6 158 051       7 032 294       7 887 856

  Developed nations        1 185 536       1 212 865       1 231 987

  Developing nations       4 972 515       5 819 430       6 655 869

  **Africa**               831 596         1 069 378       1 347 789

  Eastern Africa           261 292         342 049         441 314

  Central Africa           95 577          127 210         166 962

  Northern Africa          178 443         215 108         250 503

  Southern Africa          53 004          65 128          77 232

  Western Africa           243 280         319 882         411 778

  **Americas**             830 155         935 414         1 033 983

  North America            306 280         331 571         357 584

  **Latin America &        523 875         603 843         676 399
  Caribbean**                                              

  Central America          139 610         164 286         186 859

  South America            346 231         396 946         442 213

  Caribbean                38 034          42 610          47 327

  **Asia**                 3 735 846       4 263 948       4 744 481

  East Asia                1 493 284       1 605 221       1 707 477

  Indian Subcontinent      1 525 812       1 816 977       2 076 460

  Southeast Asia           527 103         607 479         679 498

  West Asia                189 646         234 271         281 046

  **Europe**               729 803         728 741         722 574

  Eastern Europe           306 828         304 305         301 266

  Northern Europe          94 665          96 206          97 813

  Southern Europe          145 271         144 577         141 404

  Western Europe           183 040         183 653         182 091

  **Oceania**              30 651          34 814          39 028

  Australia-New Zealand    22 981          25 401          27 855

  Melanesia                6 485           7 982           9 450

  Micronesia               541             678             827

  Polynesia                644             773             895
  ------------------------ --------------- --------------- ---------------

**Source: United Nations World Population Prospects**

Poverty did not necessarily rise in the region during the globalization
boom, and neither did the advantages brought by globalization reduce
poverty. The failure of Latin American institutions to guide development
strategies and ensure equal opportunities resulted in increased social
inequality---with important political consequences. As poverty and
inequality affect larger sectors, those people become more vulnerable to
patronage practices and populist, demagogic and authoritarian electoral
alternatives. Such alternatives will increase their influence in most of
the region as long as no significant advances are made in the social
field.

Another major social factor in Latin America is the informal economy,
particularly in labor. Informal workers experience constant income
declines, are deprived of social linkages, and have no access to the
benefits of inclusion such as credit. Labor informality, which in many
Latin American countries affects two out of three workers---sometimes
more---is related to inequality, and current projections anticipate that
job creation in the next 15 years will take place increasingly in the
informal sector. This phenomenon has different causes in diverse
countries---from the rigidity of labor legislation to the inefficiency
of the state---but it brings similar consequences everywhere:
inequality, exclusion and fiscal imbalances.

This phenomenon has institutional consequences that impinge on long-term
political and economic prospects. The retirement system of the future
faces serious sustainability risks due to the sprawling informality as
today's pensioners are supported by a smaller number of contributors and
the funds will prove inadequate for tomorrow's pensioners. Similarly,
the growth of informality hinders fiscal balances throughout the region
by distorting tax structures; the failure to collect taxes will
seriously strain government budgets.

**2.2. The Impact of globalization**

Latin America is part of an environment of global transformation that it
cannot control and does not always understand. Over the next 15 years,
the United States will remain the leading military, economic and
technological power in the world, but it too will be subject to the
restrictive influences of globalization at times. This process presents
change and opportunities for Latin America beyond its relations with the
United States.

The next 15 years will witness many changes in the world, posing risks
and opportunities. Asia and its large countries---China and India
mainly, whose growth prospects outpace Latin America's as a whole in
terms of GDP---will not only compete economically and politically with
the region but will also become growing buyers of Latin American
commodities (including food) and other exports. The integration of
Eastern Europe to the EU will result in even less attention to Latin
America in Europe's main capitals, including Madrid.

On the trade front, Latin America's degree of integration into the
globalized economy will depend not only on the strategic policies for
international integration but also on the competitiveness of its
production and exporting capacity.

**2.3. Latin American society and its cultural values**

The slow growth of Latin America in the long-term and poor performance
of national institutions have often led historians and social scientists
to analyze the system of values and cultural content of the Latin
American society---and how they relate to underdevelopment. According to
some, Latin America is not part of the West---although that was the
origin of the men and ideas that gave birth to it---but forms a
different cultural and civilizational entity.

Latin America has a young political history, in which its "personalistic
leadership"---its emphasis on particular leaders rather than
institutions---has prevailed. This condition, among others, helps
explain the divergent development of European and North American
institutions compared to the Latin American ones.

The next 15 years will see a growth of cultural contradictions in Latin
American society resulting from the emergence of new ethnic and regional
influences. The most resounding expression of this phenomenon will be
the indigenous movement, whose influence is expected to grow
particularly in the Andean Region, Central America and the south of
Mexico.

The impact and nature of indigenous movements, advocates of old social
values and historic claims, will depend on the degree of inclusion that
existing societies and powers give them. Where successful inclusion
occurs, they will gradually join the representative system and, perhaps
in some cases, pursue greater autonomy at local and subnational level.
But where political and economic exclusion rigidities prevail,
indigenism will evolve into more radical expressions that will openly
confront the social, political, economic and cultural institutions of
the European structures prevailing in Latin America. In these potential
situations, the values of historical identity and compensation will
displace economic growth expectations as the key driver of people's
actions.

The cultures and values of the Latin American societies are not a major
influence variable; although they are not insignificant. As long as
Latin American societies ignore the importance of institutions in the
exercise of power---as in the personalist tradition of *caudillos*---or
ideologically reject economic growth and well-being as public goods for
all---as may happen with some indigenous movements---those cultural
contradictions that are not satisfactorily resolved by the Latin
American elites and institutions will be a "driver" against economic and
institutional development in the region.

**2.4. Natural resources and the environment**

Latin American biodiversity will be one of the greatest regional assets
in 2020. Nonetheless, environmentalists forecast that unfavorable
trends---climatic change; degradation of land, soil, sea and coastline;
the depletion of forests and fresh water supplies---will deepen in the
next 15 years, particularly in the countries without efficient state
policies to counteract them. Whether the region raises awareness of this
problem and commits to joint solutions will determine the impact of this
driver. The region will be particularly vulnerable to the eventual
economic impact of climate change (for instance, droughts) due to the
relatively high percentage of the population that relies on the natural
resources economy in 2020. By the same token, political and
technological changes affecting this issue will exert a strong impact on
the region (for instance, the evolution of the Kyoto Protocol on
agribusiness or the future exploitation of the vast natural gas
resources in the continent).

The participation of the United States in addressing hemispheric
environmental problems will be one of the keys to the results of
multilateral initiatives. Should Washington fail to play that role,
Brazil is likely to assume leadership in coordinating environmental
policies in South America.

**2.5. Science and technology**

Generating its own knowledge capacity---scientific-technological finding
or adaptation---is a major aspect of any country's search for sustained
growth. However, almost none of the Latin American countries will be
able to invest their scarce resources in developing large research and
development projects. This applies both to the public
sector---traditional source of support for most Latin American
researchers---and the private sector. The gap between the technological
capacities of the region and the advanced countries is set to widen. No
broad-based Latin American project of relevant technological
adaptations---allowing for the creation of an exporting capacity in line
with that of Asian countries, for example---will be developed in the
next 15 years. []{.mark}

Nonetheless, there will be some exceptions and some innovation in
specific sectors. This poor trend in scientific-technological
capabilities does not preclude the possibility of some successful cases
such as Intel's investment in Costa Rica. Some state-sponsored
technological projects in industrial production or defense industries
will emerge in Brazil.

**[3. Scenarios and trends in Latin America 2020]{.underline}**

**3.1. Introduction: the quandary of finding and missing the course**

The transition of Latin America to the 21^st^ century brought with it
lights and shadows. In the 1980s and 1990s, the region made progress in
democratization and experienced some institutional development and
financial stability. But its societies face, at the outset of the new
century, new forms of crisis. The region's poor socio-economic results,
coupled with the inability of Latin American leaders and elites to
improve governance, have caused a deep loss of legitimacy and
credibility in players and political parties. Latin America's
international standing decreased as a result of world changes that
distracted the political and economic interest of the United States and
Europe to other areas of the planet. These new challenges have affected
most countries in the region---to some degree or other---raising new
questions about the future of governance and institutionalization of the
region.

The Latin America of 2020 will inherit all these assets and liabilities.
Among the assets, in 15 years, Latin Americans will be more mature and
cautious in terms of democracy and macroeconomic policies. On the
liabilities side, Latin Americans will bear a heavy mortgage of social
problems, low institutionalization, and weak (and even undemocratic)
governance. Both will have an impact throughout the next fifteen years,
suggesting oscillations between progress and setbacks.

By the year 2020, several Latin American countries probably will have
started to find a way to make progress toward serious poverty reduction
and improving institutional development. This would help end the cycle
between ungovernance and populist responses and, in this way, help these
countries integrate into the "globalized world" along with the most
advanced countries. Their economic policies will consolidate; they will
develop more vibrant national capitalism; and they will attract
long-term investments. It is likely that a considerable part of the
region will move in that direction, though it is hard to estimate which
countries and with what probability. Certain players of the
region---both due to objective indicators as well as subjective
preference---give rise to moderate optimism on their long-term
evolution. In other cases, more certainties prevail about how difficult
and vertiginous the road will be towards those results; those countries
face a higher probability of political, economic and social stagnation
and reversion to the failed models of the past.

Scenarios of political and economic governance are outlined below in
relation to the countries and regions of Latin America in 2020.

**3.2. Democratic governance: between ongoing deinstitutionalization and
successful adaptation to globalization**

The weaknesses of Latin American democracies (as discussed
above)---including their growing differences with the most
institutionalized "models" of the advanced countries in the north---have
deep roots and appear likely to deepen in many countries in the next 15
years.

A fairly likely scenario in these cases is a continuation of the ongoing
deinstitutionalization as defined above. Against a background of social
deterioration and exclusion set to prevail in many nations, the
political preferences of the excluded will favor the emergence of
populist and charismatic leaders little interested in the development of
institutions. In these cases, the political parties and institutions of
representative democracy will lose influence to movements and the
*poderes fácticos*, and phenomena such as patronage, personalism and
arbitrariness of governments will flourish. This decreasing democratic
quality trend in much of the region, however, will not be even. Many of
the South American, Caribbean and Central American countries face the
challenge of overcoming these trends, and some could even experience a
reversal of the democratic progress achieved in the past
decades---probably not as traditional *coups d'état* but through the
resurgence of authoritarianism with or without a military component.

Nonetheless, in other cases, the trend could be the opposite, yielding
greater institutionalization, democratic governance and adaptation to
globalization. Chile, Mexico, Costa Rica and Uruguay have moved in this
direction for the last decade and show the conditions to continue in
that same course. Brazil will also achieve interesting advances but
within a different regional profile that includes more complex
challenges. If we had to make a more thorough analysis of the future
political heterogeneity of the region, we would say that:

**[a]{.smallcaps}**. A considerable part of the region will be affected
by recurring governance crises. A gap between people's expectations and
governments' and societies' satisfaction of those expectations will be
the common denominator: poverty and inequality, coupled with a
decreasing political capabilities to implement solutions and the failure
of reforms to achieve persistent economic growth, will erode the
legitimacy of governments and political players---and be conducive to
high levels of social conflict. Weak administrations and populist or
authoritarian leaders will make little or no contributions to
institutionalization. This is the scenario most South American and
Caribbean countries and some Central American nations are expected to
confront.

**[b]{.smallcaps}**. Some countries will make greater advances in
democratic governance and be prepared for a successful adaptation to
globalization---the major driver of regional heterogeneity in the
upcoming years. In these cases, greater macroeconomic stability,
development of political institutions, and trade integration with the
United States and other world powers will result in successful
governance, greater social development and reduced influence of the
*poderes fácticos*. Chile, Mexico, Costa Rica and Uruguay are heading
for a scenario of that sort. (Brazil will share some but deserves a
separate scenario due to its special regional role.)

**[c]{.smallcaps}**. Brazil will seek to consolidate a regional role
that will entail a lower level of interaction with the United States, a
project that will advance somewhat but not the way that Brazil may have
expected at the turn of the century. The country will continue its
gradual progress in terms of institutional development, but its complex
domestic political and social processes will may retard achievement of
its regional leadership ambitions. Brazil's regional role will also
depend on the level of US involvement with the region. A more active
policy on the part of the United States in South America, for example,
would limit the Brazilian influence on the subcontinent.

**[d]{.smallcaps}**. In a small group of nations, economic stagnation,
political crisis, and domestic conflict (in which social, ethnic and
political elements converge) could led to deeper institutional crisis
with a growing intervention of the military---or security forces---in
politics. That will lead to authoritarian influence or cooptation of
institutions and the media---and isolation from the Inter-American
system. In countries like Paraguay, Bolivia, Guatemala or Venezuela
there are certain tendencies away from democracy and toward a new
militarism in the years ahead.

**[e]{.smallcaps}**. In one or two other cases, the steep institutional
crisis could deepen even more, with internal decomposition processes
that could---should international involvement fail---lead to a deep
statehood crisis in terms of the collapse of authority, escalation of
internal conflict, institutional fragmentation (often territorial as
well), and of the expansion of mafias and irregular *poderes fácticos*.
This failed state scenario corresponds to cases like Haiti and some
areas---not necessarily countries---of the Andean region.

**3.3. Hemispheric Integration: from the FTAA project to project
heterogeneity**

The bond established between the countries of Latin America and the
United States will be one of the greatest factors of regional
heterogeneity. Not all Latin American nations will agree on the
advantages of joining the US economy. Neither will the United States be
interested in partnering with all Latin American countries. From the
Latin American perspective, Brazil's regional project and resistance to
partnering with the United States---at least in some sectors of the
Latin American society and/or leadership---will cause the failure of the
hemispheric integration project as conceived by the original concept of
an Free Trade Area of the Americas (FTAA). Some Latin American
countries, whether on grounds of underlying geopolitical trends or the
political choices of the leadership, will favor partnering with the
United States rather than with others. The most likely scenario for the
United States will be to deepen ties with Mexico and Central America,
recognizing the growing role of Brazil and the Mercosur in the Southern
Hemisphere, and develop a "selected partners" policy with the rest of
the Latin American countries.

Where there is not a specific partnership policy at a country or bloc
level on the part of the United States, Washington's objective for the
region will be to solve problems for its own interests: prevent
conflicts derived from drug-trafficking, massive emigration, or
political instability from spreading, and act to prevent or stop crisis
scenarios.

The failure or relative failure of the FTAA plan and regional
heterogeneity in dealings with the United States would mean a limitation
(by action or omission) of US hemispheric leadership. These factors will
create a void of multinational initiatives in the years ahead in areas
requiring political coordination, such as matters involving defense and
security, environment, drug-trafficking, and migration. The United
States will not be able to participate as regional leader in many cases,
and no other big country---Mexico, Canada, Brazil and Argentina---will
be positioned to fill this vacant role except in specific situations.
However, in the long-term (perhaps beyond 2020) the hemisphere will
solve this problem through the strengthening of multilateral
institutions and the greater leadership of key countries (for instance,
Mexico in the Central American isthmus and Brazil in the Southern Cone).

**4. Less likely scenarios and "wild cards"**

When it comes to planning scenarios, it is important to bear in mind
that "the likely" does not always occur and that, as history
demonstrates, "the unlikely" occurs more often than expected. Although
the scenarios described above are the most likely for Latin America in
2020, a series of less likely hypothesis also deserve attention due to
the high impact they would entail. These scenarios are "*low
likelihood---high impact*." From the analytical viewpoint, they are
important because they involve endogenous processes in the region. Also,
some "wild cards"---unforeseen and practically imponderable
phenomena---could have high potential impact. The difference between the
former and the latter is that the latter is not linked to events the
region could control or avoid.

**4.1. "Low likelihood---high impact" scenarios**

Three low-likelihood scenarios would substantially change the political,
economic and social perspectives of the region: large scale emergence of
revolutionary indigenism, Brazilian financial collapse, and a wave of
"anti-imperialistic" governments in the region.

**[a]{.smallcaps}**. Radical, politically revolutionary indigenous
movements in several countries of the region could eventually converge
with some non-indigenous but radicalized movements---such as the
Brazilian "landless," the Paraguayan and Ecuadorian peasants, and the
Argentine "picketers." . Radicalized indigenous groups already exist in
a number of the Latin American countries. In this scenario, by 2020 the
groups will have grown exponentially and obtained the majority adherence
of indigenous peoples in their countries, and a "demonstration" or
"contagion" effect could cause spillover into other nations. The
resulting indigenous irredentism would include rejection of western
political and economic order maintained by Latin Americans of European
origin, causing a deep social fracture that could lead to armed
insurgency, repressive responses by counter-insurgent governments,
social violence and even political and territorial balkanization. A
turbulent scenario such as this would drive away capital, investment and
the market dynamic itself for a long time. Likewise, regional
heterogeneity would deepen among the countries that suffered the advance
of ethno-political irredentism (for instance, the Andean Region or
Guatemala) and countries with majority European population (for
instance, the Southern Cone).

**[b]{.smallcaps}**. Another scenario that would change many assumptions
about the future of Latin America would be a Brazilian financial
collapse---default followed by economic and social crisis like that
experienced by Argentina in 2001-2002. This is widely considered
unlikely due to the structural robustness of the Brazilian economy, the
negative example of the Argentine experience, and the fact that Brazil's
geopolitical role will favor sustained support from international
organizations and G7 governments. However, Brazil's financial exposure
will be high for several years, and the default hypothesis is not
impossible. In this scenario, the depth of the crisis will depend on how
well the Brazilian government manages it. If the crisis is deep,
Brazil's regional leadership aspirations would aimlessly drift away and
the United States would be forced to take a greater role in South
America. Mercosur would suffer serious damage, which its members would
seek to offset by signing bilateral deals with world powers. The
financial impact on the region, even on Mexico, would be heavy.
Argentina would suffer somewhat less due to its isolation from the
international capitals market.

**[c]{.smallcaps}**. Lastly, a political variant of these three
scenarios would be the emergence and proliferation at the regional
level---amid social crisis and unrest---of a wave of radicalized and
anti-American administrations in Latin America. Considering the
above-mentioned scenarios of recurring governance crises affecting most
of the region, this less likely scenario would add to the fragile
conditions the emergence of radical left-leaning or nationalist
governments in Brazil (resulting from a hypothetical financial crash)
and Mexico, triggering a "contagion effect" on the other countries. This
continental "anti-imperialistic" scenario would entail sub-scenarios of
international isolation, impoverishment and capital flight plus
conflicts and ungovernance on a regional level.

**4.2. 'Wild cards'**

Seven unforeseeable events of high potential impact could possible
occur:

**[a]{.smallcaps}**. A serious terrorist attack (such as another 9/11)
or terrible war in the United States: This would move Latin America on
the US agenda (as discussed above) to a lower position.

**[b]{.smallcaps}**. Emergence of "anti-Hispanic" nationalism in the
United States---caused by the above-referred attack or war, or by a
cultural reaction by non-Hispanic US citizens fearful of a "Hispanic
advance" that they perceive as threatening American values and way of
life. This wild card includes the possibility that the United States
could close its borders, tighten migration policies, or restrict
remittances (the main foreign currency source in many countries).

**[c]{.smallcaps}**. US military intervention in Cuba: This would be the
only alternative to the status quo as long as Fidel Castro lives and
could occur within the framework of the "global war on terrorism." . It
would have unpredictable effects in international security: the United
States would easily win the war but could not "win the peace" due to
Castro's guerrilla mobilization across the island. Also, a strong
anti-American reaction would be created in the Latin American continent
with politico-electoral consequences.

**[d]{.smallcaps}**. Changes in the international drug-trafficking
situation, as a result of the legalization of drugs, the replacement of
cocaine with another product that does not require coca leaves (e.g.,
synthetics), or another imponderable. The drug-trafficking mafias
operating in Colombia, Mexico and other countries would probably attempt
to adapt quickly to the new conditions, but this illegal trade would
experience an immediate income drop, which would be strongly felt in
countries highly dependent on the drug-trafficking economy. In addition,
the deterioration of the cocaine industry would undermine the logic of
the Colombian narcoguerrillas, paving the way for conflict resolution in
this country.

**[e]{.smallcaps}**. Replacement of oil with renewable power resources
or other major changes in the world energy situation: Such a development
would alter the political matrix far beyond Latin America, including the
Middle East and Russia, and would have sizable global effects. At
regional level, it would immerse Venezuela, Ecuador and Mexico---the
most dependent on oil revenues---into a structural crisis.

**[f]{.smallcaps}**. High-impact natural disaster or climatic change: In
the poorest regions with inefficient national states, natural
catastrophes (floods, hurricanes, earthquakes) would have a deeper
detrimental effect. The same applies to climatic change, with profound
socio-economic impact for rural populations that are highly dependent on
natural resources (desertification, droughts). Reliance on the
production of raw materials will make the region particularly vulnerable
to ecosystem transformations.

**[g]{.smallcaps}**. Collapse in China or another Asian crisis: As
counterpart to the above-described scenarios forecasting increased
exports of Latin American commodities (food) to Asia in the coming
years, this unpredictable event would entail the fall of international
prices of commodities and a harsh blow to Latin American agriculture.
Worldwide growth and trade would hit a slowdown to the point of a
driving a certain *deglobalization*, which would have a negative impact
on the regional economic growth rate. Against such a scenario,
investment flows to emerging nations would contract, and capital would
shift toward low-risk positions in stable countries. Lastly, a serious
crisis in Asia---the continent is expected to comprise 60 percent of the
world population by 2020---could drive millions of emigrants to Latin
America.

[^1]: The views expressed in this and other papers associated with the
    NIC 2020 project are those of individual participants. They are
    posted for discussion purposes only and do not represent the views
    of the US Government.