THE UNITED STATE

NAVAL WAR COLLEGE

VIR

A

IBUS M RI VICTORIA

S
Cover

This perspective aerial view of Newport,

Rhode Island, drawn and published by

Galt & Hoy of New York circa 1878, is

found in the American Memory Online

Map Collections: 1500–2003 of the

Library of Congress Geography and Map

Division, Washington, D.C. The map

may be viewed at hdl.loc.gov/loc.gmd/

g3774n.pm008790.
Latin American Security Chall

A Collaborative Inquiry from North and South

NAVAL WAR COLLEGE

Newport, Rhode Island

Paul D. Taylor, Editor

Senior Strategic Researcher, U.S. Nav
Naval War College

Newport, Rhode Island

Center for Naval Warfare Studies

Newport Paper Twenty-one

2004

President, Naval War College

Rear Admiral Ronald A. Route, U.S. Navy

Provost/Dean of Academics, Naval War College

Professor James F. Giblin, Jr.

Acting Dean of Naval Warfare Studies

Dr. Kenneth H. Watman

Naval War College Press

Editor: Dr. Peter Dombrowski

Managing Editor: Pelham G. Boyer

Telephone: 401.841.2236

Fax: 401.841.1071

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E-mail: press@nwc.navy.mil

Web: www.nwc.navy.mil/press

Printed in the United States of America

The Newport Papers are extended research projects that the

Editor, the Dean of Naval Warfare Studies, and the

President of the Naval War College consider of particular

interest to policy makers, scholars, and analysts.

The views expressed in the Newport Papers are those of the

authors and do not necessarily reflect the opinions of the

Naval War College or the Department of the Navy.

Correspondence concerning the Newport Papers may be

addressed to the Editor of the Naval War College Press. To

request additional copies, back copies, or subscriptions to

the series, please either write the President (Code 32S),

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ISSN 1544-6824
Contents

Foreword, by Peter Dombrowski 

Introduction, by Alberto R. Coll 

CHAPTER ONE Latin America’s Lawless Areas

and Failed States 

by Julio A. Cirino, Silvana L. Elizondo,

and Geoffrey Wawro

CHAPTER TWO Security Implications

of Poor Economic Performance

in Latin America 

by Paul D. Taylor

CHAPTER THREE Chinese Interests in Latin America 

by Guillermo R. Delamer, Lyle J.

Goldstein, Jorge Eduardo Malena,

and Gabriela E. Porn

Conclusion 

Bibliography 

Abbreviations 

Contributors 

Collaborating Organizations 

Titles in the Series 

Foreword

Sometimes lost in the deluge of attention devoted to national security challenges 

Middle East and Asia is the importance of America’s own backyard, the countrie

waters of Latin America and the Caribbean. Even as the United States combats te

ists and their state supporters in the greater Middle East, and even as long-range 

ners cast wary eyes on the growing power of China, American strategists cannot 

should not neglect the threats or challenges closer to home. After all, as this volu

and others point out, Latin America is a key economic partner, both a market fo

American products and a source of many of the goods North Americans have co

take for granted. Moreover, the distance between the two regions is not great; ine

crises and festering problems in Latin America lead to such problems in the Unit

States as illegal immigration. Conversely, the American struggles against al-Qa‘id

other transnational threats may bring unwanted attention to places like the tri-b

region as terrorists transit or seek refuge.

Newport Paper 21, Latin American Security Challenges: A Collaborative Inquiry 

North and South, helps reopen the door to serious analyses of the relationship b

tween Latin American national security issues and American strategic interests. T

monograph consists of an introduction and conclusion and three substantive ess

analyzing specific issues facing Latin America. The first builds upon the concept

failed states and borderless regions to suggest how criminals and perhaps terrori

find refuge and perhaps support in localities outside the control of states. The se

essay provides a solid introduction to the interconnection of economic behavior 

the national security threats facing both Latin American governments and the U

States. The final essay speculates on the interest of China in the region, with part

attention to the potential roles played by immigration and Chinese ownership of 

charged with operation of both access ports to the Panama Canal.

It is our hope that this work will help reinvigorate sound thinking about U.S. po

toward Latin America and encourage closer cooperation between strategists an

scholars in both regions. Such cooperation would provide real benefits to the nat

security communities and military establishments in the United States and many 

cal Latin American countries.

Finally, we are especially pleased with the quality of the authors represented in L

American Security Challenges. The editor, Ambassador (retired) Paul D. Taylor, i
with the Naval War College. Geoffrey Wawro and Lyle J. Goldstein are professors in the

Strategic Research Department of the Naval War College, with expertise in Latin Amer

ica and China, respectively. Dean Alberto R. Coll, Dean of Naval Warfare Studies, initiated this project and graciously contributed his thoughts in the introduction. Professo

Wawro teamed with Julio A. Cirino and Silvana L. Elizondo of the Centro de Estudios

Hemisféricos, while Professor Goldstein collaborated with Rear Admiral Guillermo R.

Delamer (Argentine Navy, Ret.); Jorge Eduardo Malena of the Catholic University, Buenos Aires; and Gabriela E. Porn of the Centro de Estudios Hemisféricos on their chapter.

With good fortune and hard work on all sides, the international and interdisciplinary

nature of this project may serve as a positive model for future collaborations.

PETER DOMBROWSKI

Editor, Naval War College Press

Newport, Rhode Island
Introduction

ALBERTO R. COLL

Two major trends in recent years have altered the context of discussions of secur

sues in the Western Hemisphere and made new assessments imperative.

The first trend is the erosion of the euphoria of the early 1990s, when the appare

cess of elections in most countries of the Americas seemed to herald a new demo

era, and market-oriented economic reforms promised greater prosperity through

the region. Regrettably, the past decade has seen a profound disillusionment, as t

promises of freedom, prosperity, and greater social and economic progress have 

been realized at a rate sufficient to convince citizens that their societies are on th

path. In some Latin American countries, in fact, indexes of economic and social 

opment are stuck where they were fifteen years ago.

The other major development, brought about by the events of September 11, 200

an increased preoccupation on the part of the United States with terrorism as th

mier security threat. While terrorism has given the Bush Administration an over

ing rationale for organizing its thinking about U.S. security, the rest of the count

the Americas do not ascribe the same priority to it, and all of them are troubled 

impression that terrorism has diverted American attention from more pressing p

lems in the region. These different appreciations make more important than eve

laborative efforts to assess security challenges, especially when they arise in the W

Hemisphere, close to home.

The work published in this volume represents an important effort by scholars in 

gentina and the United States to share assessments of security challenges and op

available to governments throughout the Americas to address them. It grew out 

versations and correspondence between Vice Admiral Carlos Luís Alfonso (Ret.)

rector of the Center for Strategic Studies of the Argentine Navy, and me and furt

the collaboration over many years in which Argentine naval officers studied and 

as fellows at the U.S. Naval War College. Admiral Alfonso and I agreed that a fres

at security issues was needed in light of a radically changing environment and th
prescriptions that could be stronger than either group could produce alone. The result

is a set of assessments from North and South as researchers in Argentina and the

United States have grappled to reach shared judgments and policies that make sense at

literally both ends of the hemisphere. As a complement to this volume being published

in English by the U.S. Naval War College Press, the Center for Strategic Studies of the

Argentine Navy plans to produce a version in Spanish.

The three papers featured in this volume treat different aspects of security issues in the

Western Hemisphere. Their topics were determined by a process in which Argentine

and U.S. researchers queried potential readers in the policy-making communities of

the two countries for suggestions of pressing concerns. They then compared the lists

that were developed and agreed to work on themes that were of interest to governmental consumers in both countries. While the primary audience, then, is policy makers, I

believe the analyses contained herein will interest scholars and students as well.

Separate sections at the end of the volume describe the scholars who prepared the papers and the institutions that collaborated on the overall effort. The project also received invaluable support from the office of the U.S. Chief of Naval Operations.

This work comes at a time when a hemispheric appreciation has evolved that the security problem is broad and multidimensional. The Organization of American States, in

the Special Conference on Security held in Mexico City in October 2003, identified a

diverse set of threats, concerns, and security challenges to stability and democracy

ranging from terrorism, crime and corruption; to extreme poverty, HIV/AIDS and

other diseases; and to the possibility of access, possession, and use of weapons of mass

destruction and their means of delivery by terrorists. The current research similarly

views broadly the causes and consequences of security threats and the measures needed

to address them.

Julio A. Cirino and Silvana L. Elizondo of the Centro de Estudios Hemisféricos and

Geoffrey Wawro of the U.S. Naval War College start their analysis of “Latin America’s

Lawless Areas and Failed States” recalling that U.S. Secretary of Defense Donald

Rumsfeld, at a regional security meeting in Santiago, Chile, in November 2002, expressed concern to his counterparts from other countries in the Americas about the

twin problems of “ineffective sovereignty” and “ungoverned areas.” Rumsfeld asserted

that Latin American governments had an obligation “to exercise sovereign authority

throughout their national territories” to prevent the spread of “ungoverned areas,”

where “narco-terrorists, hostage takers and arms smugglers” could operate with impunity and “destabilize democratic governments.” The researchers examine the tri-border

region of Argentina, Brazil and Paraguay, Colombia and Suriname as well as certain
well as “lawless areas” in which the authority of the nation state is absent and the 

bility that the more states erode, the easier it will be for terrorists to root themse

them. These situations pose considerable dangers to both Latin America and the

United States.

Cirino, Elizondo, and Wawro propose from their analysis a two-track approach t

hemispheric security. They argue that every effort should be made to penetrate, 

and destroy terrorist cells. At the same time, the hunt should be accompanied by 

of subtle nation-building, because only when governments achieve effective sove

eignty over their entire territories will they be safe from exploitation by those wh

threaten security.

In a related paper, Paul D. Taylor of the U.S. Naval War College examines “The S

Implications of Poor Economic Performance in Latin America.” Citing recent, di

aging economic results in most countries of Latin America, he explores the cons

quences for support for democracy, internal security, migration, and relations be

Latin America and the United States. While he recognizes the negative effects on 

rity that may flow from factors other than economic hardship, such as corruptio

lack of effective political participation, he has shown that the overall consequenc

poor economic performance harm security within Latin America and the ability 

Latin American governments and Washington to work well together to improve 

rity. An additional vexing problem with long-term consequences is the skewed d

bution of income that afflicts most countries in the region. Taylor offers a set of

recommendations that governments in Latin America and the United States sim

neously could employ to address current security, diplomatic, economic, and tra

problems. While arriving at these conclusions from a direction different from Ci

Elizondo, and Wawro, Taylor reinforces their emphasis on effective nation-build

key to improved security.

Argentine Rear Admiral Guillermo R. Delamer (Ret.); Lyle J. Goldstein of the U.S. 

War College; Jorge Eduardo Malena of the Catholic University, Buenos Aires; and

Gabriela E. Porn of the Centro de Estudios Hemisféricos assess “Chinese Interest

Latin America.” They start by examining China’s new and more dynamic diplom

They see this effort as part of a strategy aimed at developing new markets while a

promoting a policy of “multipolarization.” As a region geographically distant fro

China, Latin America had received little notice from Beijing. To the extent that C

does focus on Latin America, it reflects the fact that fourteen countries in the Am

continue to grant diplomatic recognition to the Republic of China (Taiwan), and

Beijing is concerned about Latin American votes in the United Nations on huma
commercial, with exports from China to Latin America reaching almost $7 billion in

2001. The researchers identify, though, a number of reasons why further growth in

commercial relations between China and Latin America may proceed slowly.

They explicitly examine several developments that have been identified as possessing

potential security implications in Latin America: investments of Hutchinson

Whampoa, a Hong Kong–based company, to operate both access ports to the Panama

Canal; triads or transnational criminal organizations related to China; and illegal Chinese immigration and Chinese presence in the tri-border region. While recognizing a

need for continuing assessment, the researchers conclude that present Chinese activities in Latin America are neither large in scale nor threatening.

Taken together, these essays represent an assessment that is more valuable than the sum

of its parts. By incorporating the results of Argentine and U.S. thinking on security issues, the papers provide a series of richly multifaceted perspectives. They do not agree

with one another in every respect, but the consensus they represent is the more remarkable and useful because of the diverse and independent approaches that were employed to produce them. For any policy maker or scholar interested in the Americas, I

commend them enthusiastically.

A chief mission of the Naval War College since its founding in 1884 has been to promote interaction by its faculty with international military, government, and academic

leaders. This enables our faculty to stay closely connected with developments in other

countries, and to study those developments from an academic, analytical perspective

independent of whatever policies the Administration of the moment is pursuing. One

of the benefits of this strong tradition at the College, reinforced over the years by all

Naval War College presidents, is obvious: a student body that is better informed and

better capable of discussing complex international issues affecting U.S. strategy and

policy. Throughout Latin America, Asia, Europe, and the Middle East, our faculty are

hard at work trying to understand the world, and trying to explain America to the rest

of the world. This collection of perceptive essays is the latest outstanding example of

this fine tradition.

BRAZIL

BOLIVIA

COLOMBIA

ECUADOR

PERU

Maicao

ARGENTINA

URUGUAY

Buenos Aires

PARAGUAY Rio de Janeiro

CHILE

Lima

VENEZUELA

Ciudad del Este

SURINAME
Latin America’s Lawless Areas and Failed St

An Analysis of the “New Threats”

J U L I O A . C I R I N O, S I LVA NA L . E L I ZO N D O, G E O F F R EY WAW RO

At a regional security meeting in Santiago, Chile, in November 2002, U.S. Secreta

Defense Donald Rumsfeld expressed concern to the assembled South American d

ministers about two twinned problems: ineffective sovereignty and ungoverned a

Latin America’s elected governments, Rumsfeld said, have an obligation “to exerc

sovereign authority throughout their national territories” to prevent the spread o

governed areas” where “narco-terrorists, hostage takers, and arms smugglers” can 

ate with impunity and “destabilize democratic governments.” He might have add

“and arm for attacks against the United States.” For much of the Bush administra

anxiety has to do with the relative facility with which Islamist terrorists, includin

Hezbollah, Hamas, and al-Qa‘ida, can establish themselves in the big cities, prov

capitals, and ungoverned areas of South and Central America. There are six milli

people of Muslim descent living in Latin America; 1.5 million live in Brazil (whi

tains more Lebanese Arabs than Lebanon itself), and seven hundred thousand re

Argentina. The rest of Latin America’s Middle Eastern emigration is scattered, w

largest concentrations in Venezuela, Colombia, Paraguay, Chile, Peru, Honduras, 

Bolivia.1

This joint project, involving the U.S. Naval War College’s Strategic Research Dep

ment, the Argentine Navy’s Center for Strategic Studies, and the Center for Hem

spheric Studies Alexis de Tocqueville, recognizes the urgency and importance of 

common concerns, and seeks to establish and analyze the relationships that exist

among Latin America’s “weak states,” “failed states,” and “accomplice states” and 

actual conditions that give rise to what we call “lawless areas.” The actual lawless 

(areas sin ley) that we investigate in this research reside in the Triple Frontier (tri

frontera) of Paraguay, Brazil, and Argentina, much of Colombia and its border zo

and the small state of Suriname. There are others—in Ecuador and Peru, for exam

but we address the most alarming cases, and our conclusions apply to every lawl

CHAPTER ONE
as early as 2001.

We also investigate distressed, anarchical urban areas. The best examples of this phenomenon are, of course, the favelas in Rio de Janeiro and São Paolo. Less famous but

no less perilous are the villas miserias around Buenos Aires, the pueblos jovenes around

Lima, and every other sprawling shantytown in South-Central America that evades the

control of local and national authorities, thus creating “enclaves” that, in the Brazilian

case, have become “parallel states” beyond the reach or remit of the legal government.

Although objective evidence of failed or failing states is plentiful, we have, in some instances, taken the ideas of Robert Rotberg as a jumping-off point in the charting of a

topic that is little discussed by analysts in our region. Almost all of the cases that

Rotberg mentions refer to Africa, which has different political and cultural underpinnings than Latin America. Thus, when the time comes to explain the “roots” of the

failed state in our hemisphere, the answers lean more toward corruption than problem

with state creation and legitimacy, as is the case in much of Africa.

We conclude by examining the issue of whether or not to employ Latin American

armed forces to control lawless areas, a delicate matter for the democracies in the region. We end by suggesting a number of strategies to cope with Latin American lawless

areas.

Seeking Answers to the Terrorist Threat

The relatively new transnational terrorist threat, with its bases in obliging accomplice

states, has taken much of the air out of the heady, optimistic talk of a peaceful, interdependent “global village” and deflected attention back to the old nation-state.

In Afghanistan in 2001 and afterward, the United States made clear that every nationstate is responsible for developments inside its borders, and that ineffective sovereignty

and terrorist entry and activity may necessitate preemptive attacks by U.S. or coalition

forces.2

In this American interpretation, state sovereignty ceases to be an entitlement

related to national self-determination and international law. Instead, state sovereignty

becomes a weighty responsibility and obligation for the overall security of the international community.

In this line of thinking, two categories appear that enable us to conceptualize response

to the terrorist threat. On the one hand, we have the notion of weak or failed states—

repeatedly referred to in the U.S. National Security Strategy—and on the other, areas

where the nation-state is absent, areas that Secretary Rumsfeld recently deemed ungov

erned zones or lawless areas.
of the anti-American terrorist threat in weak, permissive states of the developing

world. If, as Roger Noriega (U.S. assistant secretary of state for Western Hemisph

Affairs) said in October 2003, “strong democratic governments and prosperous s

ies” are the best defense against political erosion in Latin America, it stands to re

that the converse is also true. The more states erode, the easier it will be for terro

root themselves in them.3

If we review the basic literature concerning this territorialization, we can see tha

inals seek to remain invisible by settling in remote areas or mingling with urban 

lations. Sometimes, the terrorist presence is almost virtual, and its profile is extre

low. Working as networked nodes in a global web, the eventual territorialization 

these “super-empowered” terrorists presents an entirely different threat and chal

from that posed by the terrorists and “freedom fighters” of the 1970s: those oper

from so-called liberated zones.

The “privatization” of global terrorists, who draw only a limited amount of supp

from friendly states or citizens to ensure their viability, makes it difficult to find 

Worse, their alliances with organized crime, drug smugglers, and complicit host 

give them great flexibility, a regular cash flow, and actual territory where they are 

from pursuit.

The offensives against Afghanistan and Iraq—and attacks on other fronts in the

“Global War against Terrorism” such as Yemen, Pakistan, and the Philippines—h

pushed those fleeing terror groups to seek new sanctuaries from which to contin

their fight. That is where the lawless areas come in.4

For terrorists, there is a grow

need to find spaces that offer the opportunity to “set up shop” in the Western He

sphere, whether a lawless area or an enfeebled, relatively open nation-state.

A cursory glance reveals a number of Latin American areas that favor the territo

alization of the terrorist threat. Some of them are in the Triple Frontier area of A

tina, Brazil, and Paraguay. Others lie on the borders of Argentina, Brazil, and Uru

the triple border area in Colombia, Peru, and Brazil; the frontier between Ecuado

Colombia; Panama’s Darien peninsula; and Maicao in Colombia. We also identif

Iquique in Chile, Chui in Brazil, and Colón in Panama as menacing gray areas. T

mayor of Chui, Mohammed Kassem Jomaa, was linked by Uruguayan intelligenc

September 2001 to al-Qa‘ida, charges he denied.5

When the offending state actually offers the desired sanctuary, we speak of a new 

gory: the accomplice state, among which we can include Suriname and perhaps P

guay. These states are fully recognized by the international community. They hav

capacity to both internalize and externalize their power, unlike failed states, but t
tary figures involved in criminal activities.

Defining Lawless Areas

We’ve adopted the label “lawless areas” to identify those regions not effectively controlled by the state and where rogue elements—organized crime and terrorist groups—

have comfortably settled.

The sovereign power of the state is its ability to enforce the law and provide security fo

a country and its citizens. Thus, if the state is unable to enforce the law in portions of

its territory, then we have the setting for a new lawless area and its entire array of illega

activities, which, importantly, have their own independent codes of conduct that function in place of national law.

6

A perfect example of this situation was the notorious despeje, or “free zone,” in Colombia—

no longer in existence—where the Fuerzas Armadas Revolucionarias de Colombia

(FARC) guerillas were permitted by Bogotá to apply their own force and laws to a region the size of Switzerland. On a smaller territorial scale, the bosses of the Brazilian

favelas impose their edicts on thousands of people.

Three key elements facilitate the consolidation of lawless areas. The first element is

simply the weakness of national and local political institutions. The weakness of the

Latin American state is a critical issue for regional security. In the first place, it can be

explained by two parallel processes: the inability of the state to maintain the legitimate

monopoly of force, and the corruption of many government officers and bureaucrats.

Political-geographical factors are also at work. The evidence reveals that the Latin

American border regions and specific geographical features generate favorable conditions for the creation of lawless areas. Socioeconomic factors play a role, too, including

the spread of free economic zones, the existence of ethnic minorities, and the availability

or absence of reliable communications.

Obviously the existence of these factors in varying strengths does not imply the automatic formation of a lawless area. Quite the contrary: it is the restless activities of crim

inals that drain the law and sovereignty from an area.

Lawless Areas: Triggering Agents

Two factors trigger lawless areas: politics and economics.

“Political insurgents” are the regional guerillas nowadays classified as terrorists.7Colombia

is “Exhibit A,” but Latin America is rife with other Colombia-like insurgencies. The

Zapatistas in Chiapas are another example, as are certain Peruvian and Ecuadorian groups.
with the drug-smuggling cartels, which it no longer just protects but controls an

manages. In a typical year, the FARC earns more than half of its six-hundred-mi

dollar revenue from the sale of cocaine and heroin. With their coca fields under 

less attack, the FARC, Ejercito de Liberación Nacional (ELN), and Fuerzas de

Autodefensa de Colombia (AUC) paramilitaries have quietly become the United S

chief suppliers of heroin, furnishing 80 percent of the heroin that reaches Ameri

streets.8

Meanwhile, they have dispersed their coca crops across smaller, conceale

plantations and diverted massive cocaine (and crack) exports to Brazil and Euro

Guerillas who were once political are increasingly commercial in outlook; they a

effect, “commercial insurgents.” (See table and figure.)

“Commercial insurgencies” engage in for-profit organized crime without a predo

nant political agenda. The FARC, for example, has all but discarded its founding 

ogy of communism and Bolivarism in the all-consuming quest for money. To

maximize income from illegal activities, these groups tend to interact with the pu

sector. At first, they corrupt select officers or bureaucrats; then they gradually un

mine the entire system.

Both political and commercial insurgencies require lawless areas in which to ope

Each type of insurgency has distinguishing traits.

Political insurgents like the FARC or Shining Path, enmeshed in drug smuggling 

sheltered by rough terrain, tend to carve out their own spaces. These lawless area

barred to the state, which finds it difficult to overcome the geographical barriers 

the fierce paramilitary resistance. In these cases, the lawless areas approximate th

guerilla “sanctuaries” of the 1970s.

The search for sanctuaries in neighboring countries, especially around Colombia

opens the way for a spillover or “regionalization” of local civil wars. Colombia’s s

ing borderlands with Ecuador, Venezuela, Panama, Peru, and Brazil qualify, with 

ing degrees of intensity, for this frame of reference. “Narco-guerillas” carve out t

enclaves from which terrorists and organized crime syndicates can operate as we

In other cases, lawless areas spring from organized crime and venal officers and b

reaucrats. Such spaces are buttressed by lax borders and regulatory systems, the c

tion of local authorities, and satisfactory telecommunications. In marked contra

the political insurgent, the economic insurgent does not seek to destroy the polit

power, but merely to bend it to his needs. Nevertheless, the corruption lever inex

weakens and crumbles the host state from within. Witness the collapse of Fujimo

rotten regime in Peru.
AREA

TRIPLE

FRONTIER DARIEN MAICAO

Frontier 2 countries x

3 countries x

No x

Corruption Local forces x x

Accomplice state x

Political

Insurgency Local x

Neighbor x

Internal

Eventual x

Commercial

Insurgency Not present x x

Not registered

Free Economic

Zone Yes x x

No x

Geography Jungle x x x

Other

Active Minorities Chinese x

Muslim x

Other

None x

Armed

Confrontations Spread

Eventual x

None x x

The Lawless Areas
AREA LETICIA

LAGO

AGRIO SURINAME CO

Frontier 2 countries x

3 countries x

No 

Corruption Local forces x x 

Accomplice state x

Political

Insurgency Local x x

Neighbor x x

Internal

Eventual

Commercial

Insurgency Not present x x 

Not registered

Free Economic

Zone Yes 

No x x x

Geography Jungle x x

Other x 

Active Minorities Chinese x 

Muslim x

Other

None x

Armed

Confrontations Spread

Eventual x x 

None x

The Lawless Areas, continued
POLITICAL

DIMENSION

POLITICALGEOGRAPHIC

DIMENSION

POLITICAL

INSURGENCY

COMMERCIAL

INSURGENCY

VICTIM

STATE

ACCOMPLICE

STATE

Local Forces

Corruption

Border Area

Geography Jungle

Mountain

Other

Yes

No

2 Countries

3 Countries

State

Level

Inability to retain the

legitimate monopoly

of force

Dimensions of the Lawless Areas
SOCIOECONOMIC

DIMENSION

Free Economic Zone

Communication

Ethnic

Minorities

Asian

Muslim

Indigenous

Other

No

Yes

No

High Availabili

Low Availabilit

Dimensions of the Lawless Areas, continued
crime, the zones become magnets for all manner of criminals and terrorists. By and by

they become nodes in a dangerous network.

The Political Face of the Lawless Area: The Weak State

The weakness of the Latin American state stems from two factors: a global crisis of the

nation-state and a regional deterioration in central state power.

On the global stage, the liberal democracies evolved since the 1970s are painfully torn

by the conflicting demands of the market (lower taxes and regulation) and those of

popular democracy (more social protection and services). In Latin America, the military has periodically been summoned to resolve the conflict, with mixed results. With

globalization, the weakening state can be further weakened by international forces like

free trade and fickle short-term investment.9

In the 1990s, the countries of Latin America attempted to solidify democracy and dismantle their massive welfare states. It was hoped that privatization and neoliberalism

would create smaller, more dynamic enterprises. Unfortunately, neoliberalism as often

as not resulted in state corruption, and a precipitous weakening of institutions and

their legitimacy in the public mind. Welfare safety nets were removed, exposing millions to the shock of economic failure. The disdainful rejection of Carlos Menem by

Argentine voters in May 2003 showed just how disillusioned a South American people

could be with neoliberal nostrums.

On the domestic front, the continued exclusion of huge sectors of society from the

production cycle generates growing demands on the state, especially in areas of security, health care, and education. Countries like Brazil, with its $350 billion foreign debt

or Argentina—bowed under $52 billion of external debt—have no cushion against

these accumulating social threats. States in crisis are unable to cope with the huge demands placed on them by their needy citizens and exigent lenders. This, in turn, gener

ates a severe governability crisis, what Favio Wanderley Reis, a Brazilian analyst, terms

“Hobbesian ungovernability.”

10 The phrase “refers to the deterioration of the social tissue, to the growing crime rate and urban violence, to the appearance of areas where th

central state’s authority has no way to assert itself, thus compromising the state’s ability

to provide public order and the security of its people.”

11 Hobbesian ungovernability

stems from two key problems that undermine the legitimacy of the state: the partial or

total loss of the legal monopoly of force and systemic corruption.

Colombia is, of course, the most flagrant example of this, where the state controls only

part of its territory and has surrendered control of much of the rest for four decades.

Identical problems appear in Brazil, where the drug barons rule the favelas and
age and adult civilians move about freely with AK-47 assault rifles, shotguns and 

guns.”

12 Similiar situations can be seen in most overcrowded Latin American citi

Though the challenge to North, South, and Central American governments is ob

in the case of political insurgency, it is no less urgent in the face of commercial in

gencies. Think of the ease with which Rio’s drug lords (matutos) have been able t

alyze a great city of seven million by forcibly closing schools, shops, and streets, o

way in which drug-related corruption skews the politics and public affairs of at l

fifteen Brazilian states.

A second point to take into account is that challenges to the state’s monopoly on 

force have been carried out vigorously, and sometimes even legitimated in the pu

mind. Pablo Escobar, for example, was a local hero in Colombia, where he annua

nated part of his vast income to the people of Medellin. Subcomandante Marcos 

Chiapas won wide support for his attacks against a corrupt Mexican government 

1990s. Bolivia’s Evo Morales, expelled from Congress for his vigorous opposition 

U.S.-funded counterdrug program, is today a local hero, an indigenous Robin H

who stands with the poor farmer (and rich cocalero) against U.S.-imposed eradic

efforts. In 2002, Morales nearly won the presidency of Bolivia, despite massive pr

from Washington. Indeed, U.S. opposition was probably the single greatest issue 

Morales’s favor with Bolivian voters.13

Corruption shows itself everywhere in Latin America. It coats almost every level 

reaucracy, from the highest authorities, who require large sums of money to man

late the political-administrative machine, to the small fry: customs officers, bord

police, and provincial and municipal officials. A searing Brazilian congressional 

of 2000 identified scores of government officials involved in narcotics trafficking

cluding mayors, judges, police officers, two former state governors, two member

Congress, and fifteen state legislators.14

Although there is systemic corruption in Latin America, we are still able to distin

between those countries where the bureaucrat allows himself or herself to be bri

ignore certain activities (something that each of them does independently), and 

where the state itself enthusiastically enters into illegal activities, using the privil

national sovereignty and institutions to foster those activities with impunity and 

much efficiency as local authorities can muster. These states, which we’ve denom

accomplice states, can even contrive specific laws to meet the needs of their crim

activities.
Lawless areas are generally border zones—the greater the number of international

frontiers, the better—and jungle areas difficult to access.

The border zones offer obvious advantages for political and economic insurgencies.

Political insurgents prefer to set up in adjacent territories that are poorly integrated,

while the commercial insurgents favor active border areas, preferring to blend in amid

business and government activity and corruption. The border offers a safe place to the

political insurgent and easier access to communications, weapons, provisions, transport, and banks.

For the commercial insurgency, the frontier creates a fluid, trade-friendly environment

Border controls are perfunctory in “free trade” areas, and there is a great demand for

goods that are linked to smuggling, document fraud, illegal immigration, and money

laundering.

For the political insurgency, terrain and topography often favor the narco-guerilla.

Jungles permit him to hide massive bases and training camps, and also laboratories,

plantations, and clandestine runways. The Amazon region, huge and impenetrable, is a

clear example of the shelter that the jungle areas give. On all of Colombia’s borders—

with Panama, Ecuador, Brazil, and Venezuela—jungles cloak illegal activity, as is the

case in the tri-border area. In the Triple Frontier, dozens of runways have been identified, and the Rio Parana is heavily used for illicit traffic.

The Socioeconomic Dimension

Three elements are regularly observed in the appearance of lawless areas.

First: the existence of minorities. The network of family ties that bind emigrants to

their co-nationals back in the motherland is a key factor in the transnationalization of

organized crime and terrorism. In the case of Latin America’s Chinese minorities, their

presence is notorious in the tri-border area, Colón (Panama), and Suriname. They are

also active in the large Latin American cities. It is no secret that the Chinese minorities

which are particularly insular, show a close relationship with the triads for their establishment and protection.

Arab and Muslim minorities, mainly from Lebanese emigrants who fled the civil war o

the 1970s, also make fertile soil for Islamist terrorism. The Lebanese communities

maintain their long shopkeeping tradition, which provides convenient links for money

laundering as well as the swift movement of funds to different parts of the world.

There are strong Arab minorities in the Argentine-Brazilian-Paraguayan tri-border
and Chui in Uruguay.

Second: free economic areas generate a volume of business activity that encourag

hides the operations of organized crime. Several places in the hemisphere foster 

lems related to drug smuggling and contraband: the tri-border towns of Foz do I

and Ciudad del Este; Maicao; Colón in Panama; Iquique; and Chui, to name but 

Third: efficient services and communications are fundamental to the economic i

gency. For this reason, most economic insurgencies gravitate toward the city. Ind

the rural and semirural scenarios apply only in the case of drug cultivation and p

cessing. Thereafter, real business and money laundering can only be transacted in 

urban environment, where one finds banking services, telecommunications, Inte

access, and a place to hide the operations. These urban settings are also needed b

rorist cells that operate in networks.

Lawless Areas and the Territorialization of Terrorism

Terrorism has traditionally been state sponsored. But since the end of the Cold W

and the collapse of the Soviet Union—which had extended protection to many s

soring regimes like Syria, Iraq, Cuba, and Libya—state sponsorship has declined 

portance. Moreover, international terrorism now has independent objectives of i

and has found alternate sources of funding and logistics.

Some of these sources are provided by religious communities spread around the 

others by alliances with organized crime, often in the lawless areas. A notorious c

was the steady territorialization of al-Qa‘ida in Sudan and then Afghanistan. Thi

particularly worrisome, for it concerned not a mere network of cells, but a netwo

networks. Indeed, al-Qa‘ida’s peculiar structure has little in common with the cla

hierarchical organization of other terror groups.

The chief question, still unanswered, is why such a flexible and deadly structure 

Qa‘ida has sometimes taken a territorial form, putting many of its cells at risk “i

open.” Second, after the military defeat of the Taliban regime and the flight unde

ground of the al-Qa‘ida networks, is the idea of some sort of territorialization st

alive? Or have Bin Laden’s network managers resolved to maintain the cells inter

nected in only a virtual way—by using a mix of high-tech and human messenger

without trying to resettle territorially?

Even though many terrorists are anonymous and can live in the great capitals wi

being identified, for others the fall of Afghanistan represented immediate peril. W

they had to flee, the only sanctuaries available were a handful of countries or reg

Chechnya; parts of Pakistan, Iran, and Iraq; Yemen and the Horn of Africa; certa
in this article.

This issue becomes relevant for the evaluation of the future prospects of the lawless areas. If terrorists like Bin Laden choose not to territorialize their networks in the future

it is logical to wonder whether their stateless operations can maintain optimal or even

good levels of efficiency. Or they can do as the FARC and the ELN have done: seize enclaves and transition from the old romantic conception of the guerilla or jihadi to a

new, more accurate version characterized by self-financing via drug production and a

cozy, mutually profitable relationship with organized crime and corrupt officialdom.

Lawless Areas and the Geography of Organized Crime

“Globalization” and “transnationalization” are words used to describe business, economic, and political trends. Increasingly, these terms also characterize crucial developments in the world of organized crime, drug trafficking, and terrorism.15

An example: less than ten years after the disappearance of the Medellin and Cali cartels

the Colombian government confirms the existence of over 160 networks with more than

four thousand members related to forty criminal groups all over the world. A so-called

Cartel of the Northern Valley (Cartel del Valle del Norte) is assuming a dominant role.

The cartel’s expansion over the hemisphere is a reality: “Many of the Colombian

groups have developed exporting routes to the south in order to reach the US or Europe from ports in Chile or Argentina. The Colombian Department of the Amazon is

now the headquarters of several drug trafficking organizations, which export narcotics

through Ecuador, Peru or Brazil.” Brazil, of course, is a country of 175 million with a

gross domestic product (GDP) of $1.3 trillion. It is the biggest and closest market for

Colombian heroin and cocaine after the United States.16

Simultaneously, over the last decade, new criminal networks have settled in the hemisphere. The most important ones are Russian and Ukrainian syndicates that have become inside dealers in the heroin, cocaine, and weapons trade. Today they operate in

agreement with Colombian, Peruvian, and Mexican drug lords, and in many cities they

actually distribute drugs and arms. They have “deep pockets”: in Colombia alone, drug

traffickers generate an estimated two billion dollars of annual profits.17

The struggle against these groups is difficult, not least because the Russian and Ukrainian narcos—in contrast to the Mexicans and Colombians—have no preference for

their own country of origin and are willing to settle anywhere. Indeed, they prefer to

settle multiple cells in dozens of countries. Linked by computers and the Internet, with

cutting-edge communication technologies and the latest encryption software, they establish diverse, secure control and communications centers.
Aires, Berlin, Budapest, Geneva, London, Madrid, Miami, New York, Toronto, W

and Washington, D.C. And yet those centers are merely the tip of a deep iceberg 

includes international networks such as the one existing in Peru-Ecuador, which 

tated the import of more than ten thousand automatic weapons from Lebanese m

chants to the Colombian jungle.

Do such networks truly depend on the lawless areas? Not exactly: the areas sin ley 

not indispensable. If the Latin American states were to reassert effective control o

their territory, organized crime would not disappear, but the volume of illegal ac

would be reduced and many of the cells would be physically crushed by the reim

tion of government control. Thus, organized crime groups insist on maintaining 

crecy in their territorial bases, preferring always to bribe and co-opt officials rath

than confront them.

Accomplice States, Victim States, and Failed States

The ineffective sovereignty exercised by a number of Latin American countries n

rally exacerbates the problem of lawless areas. There is a growing recognition tha

or failed states pose considerable dangers to both Latin America and the United 

By “failed states” we—taking our cue from leading analysts like Robert H. Jackso

William Zartman, and Robert I. Rotberg—mean nations that cannot provide sec

and exercise full authority within their borders. Failed or failing states usually re

outside assistance to save themselves.18 In the latest research on the subject, most 

lysts agree that when the world faces a dispersed, networked, aggressive enemy, n

sovereignty can cease to be an automatic entitlement and become instead an obl

to one’s peers in the international community.

Most academic papers that touch on failed states assume an African milieu. But 

Senegalese, or Nigerian assumptions do not fit Latin America. In South and Cen

America, we must first grasp the concept of the weak or accomplice state, which 

applied to several regional cases. We can then consider failing states such as Colo

and their efforts to recover. These are essentially new categories, which illustrate 

peculiar realities of the Western Hemisphere.

Venezuela is perhaps the most worrisome accomplice state. President Hugo Cháv

placed his weakened regime at the service of terrorists, distributing—as reported 

Linda Robinson in October 2003—“thousands of Venezuelan identity document

[cédulas and passports] to foreigners from Middle Eastern nations, including Syr

kistan, Egypt and Lebanon.” Chávez employs Cuban and Libyan advisers in his s

services, and provides military, logistical, and financial aid to the Colombian FAR
American ambivalence. Though Washington loathes the dictator in the political sense,

it sustains him economically so long as he works with U.S. oil companies.19 With terrorists gathering on Venezuelan soil—there are radical mosques in Caracas and Hamas

and Hezbollah support cells on Margarita Island—this is dangerous hypocrisy.

20

Other accomplice states are based on institutionalized corruption. These states are politically and economically “weak,” but unlike failed states, they still exercise authority,

albeit on a deliberately corrupted basis. Less ideological than Venezuela, they expend

what energy they have in maintaining a modicum of public order to guard a profitable

status quo, randomly colluding in illegal activities. Paraguay, Suriname, and Haiti (before the fall of Aristide) are fine examples of this. Peru descended into this category

during the Fujimori-Montesinos regime, when the leaders trafficked in arms and drug

and senior generals embezzled more than thirty-four million dollars of public money

during the 1990s.21

These accomplice states are ideal environments for organized criminals and terrorists,

for they remain stable thanks to international recognition (and protection) and escape

the odium and attention directed at failed states like Afghanistan or Somalia. Accorded

the rights of sovereignty by the international community, they are able to keep their

territory under sufficient control to ward off outside interventions. Though it is possible to characterize some parts of their territory as lawless areas where nonstate criminal or terrorist networks will settle, the states continue to function in the capitals and

most of the provinces.

Faced with rampant illegal activity, authorities in the accomplice states either remain

on the sidelines or actively join and promote the crime. This is generally done in one o

two ways: either by passing special laws or by suborning the state’s agencies, soldiers,

and bureaucrats. State police or troops can be induced to remain on the sidelines by

raw force: in Brazil, for example, seasoned gang members earn an average of one thousand dollars per month, compared with just four hundred dollars per month for street

cops. The gangsters are better motivated and armed; they carry assault rifles, grenades,

night-vision goggles, and cell phones. No wonder government police rarely venture

into the favelas; it would be suicide to do so.

22 The chief businesses of Latin American

accomplice states are weapons and human smuggling, contraband, chemical precursors,

document fraud, money laundering, and drug trafficking. Among the accomplice states,

we treat Suriname as a case study, while keeping under observation other cases, such as

Venezuela, Paraguay, or Bolivia, where there has been a sharp deterioration in economic,

social, and political stability. The unrelenting rise in corruption throughout the hemisphere increases the likelihood that victim states will evolve into accomplice states.
over broad tracts of national territory, are nevertheless unable to rectify the situa

In some cases this is because they lack the military means to act decisively agains

well-armed adversary. In others, it is because they cannot rein in thoroughly corr

officers and officials. With its own armed forces deeply invested in a drug trade t

supplies 20 percent of American and European demand, Haiti swings between vi

and accomplice status. Jean-Bertrand Aristide’s Lavalas party was sensationally c

and violent, as were the paramilitaries who ousted him. Whatever reformed insti

tions arise in post-Aristide Haiti, the disparity of wealth and resources between a 

imized state” like Haiti—where 80 percent of the population lives in extreme pov

and the growing number of illegal transnational actors camped on Haitian soil i

that crime and corruption will likely remain the indispensable hubs of state activ

Case Studies

For closer study, we have selected three Latin American cases that we regard as ex

plary and menacing. Together, these three cases—buttressed by a broader discuss

other, related cases later in the paper—give a deeper understanding of the securi

problems brewing in Latin America. The first case is the lawless area par excellen

the tri-border area connecting Brazil, Argentina, and Paraguay. The second case is the c

accomplice state—a sovereign state rather too easily manipulated by criminal elemen

Suriname, formerly Dutch Guiana. The third case is the classic “victim state”—a cou

aware of its vulnerability but unable to fix it—Colombia.

Triple Frontier Area: Argentina, Brazil, and Paraguay

In the notorious Triple Frontier, we have a clear example of a lawless area initiall

formed by commercial insurgency that has recently begun financing terrorist cel

Though monitored by at least five different intelligence agencies—Argentine, Am

can, Brazilian, German, and Israeli—terrorist networks have nevertheless entren

themselves in the permissive Triple Frontier. Some activities of the tri-border Ar

community have moved to Iquique in Chile, and the more notorious visitors—li

Khalid Sheikh Mohammed or Osama Bin Laden—have long since abandoned th

but the Triple Frontier remains a hive of illegal activity and a potential source of 

rorist attacks. On 10 June 2004, the U.S. Treasury publicly identified a number o

companies in the tri-border area used to launder and funnel money for Hezbolla

erations in Iran and Lebanon, and to extort “donations” from legitimate tri-bord

businesses.24

Politically, the tri-border area is characterized more by laxity and corruption tha

overt challenges to state authority. Paraguay is the softest in this regard—indeed
have reportedly used stolen cars; Paraguay’s consular agents in Miami, Panama, and

Salta (Argentina) allegedly have price lists for fake visas, and Asunción’s enforcement

of patents and other legal controls is notoriously weak.25 The Paraguayan government

is allegedly deeply involved in smuggling activities and document fraud as well as orga

nized crime. Weak attempts by President Nicanor Duarte to combat corruption and

crime have been answered with death threats and assassination plots, most recently in

January 2004.26 The governor of the Paraguayan province surrounding Ciudad del Este

is alleged to be the owner of forty clandestine airstrips used for guns, drugs, and other

contraband.27 The largest ethnic minorities in the Triple Frontier are the estimated

twenty thousand Arabs and thirty thousand Chinese, two groups that make the region

fallow ground for organized crime and Islamist terrorism.

In Ciudad del Este and Foz do Iguaçu, Islamists use a sophisticated network of charitie

and forced “donations”—20 percent of shop income—to generate cash for their organizations. Hamas and Al-Gamaat al-Islamiya are active in the Triple Frontier, and

Hezbollah, whose annual operating budget is roughly one hundred million dollars,

raises roughly a tenth of that in Paraguay, where there is no antiterror law to constrain

donations. Al-Qa‘ida has similar operations, as the post-9/11 arrest of Ali Dahroug revealed. The owner of a Ciudad del Este perfume shop, Dahroug—listed in an al-Qa‘ida

address book—was wiring eighty thousand dollars a month to banks in the United

States, Europe, and the Middle East. Brazilian authorities estimate that six billion dollars per year is laundered in the Triple Frontier, often by inflating the cost basis of imported goods and then skimming off the surplus in foreign banks.28 Argentine

intelligence estimates that seventy million dollars of uncontrolled cross-border transactions occur every day. A senior U.S. State Department official called the region (in

late 2003) “a black hole. . . .of terrorist financing.”

29 U.S. Southern Command estimates

that Islamist terrorist groups raise between three hundred million and five hundred

million dollars per year in the Triple Frontier and the duty-free zones of Iquique,

Colón, Maicao, and Margarita Island.30 Imad Mugniyah—the alleged organizer of the

1983 Beirut embassy and Marine barrack bombings, the 1985 TWA hijacking, the

Khobar Towers bombing of 1996, and the Buenos Aires bombings of 1992 and 1994—

is believed to have established terrorist cells in Ciudad del Este and nearby

Encarnación. His clients in the Triple Frontier may include Assad Ahmed Barakat,

whose “Barakat clan” oversees much of the Hezbollah fund-raising and has wired at

least fifty million dollars from Ciudad del Este to Lebanon. The Barakats, the U.S. Trea

sury noted in June 2004, “have used every financial crime in the book to generate fund

ing for Hezbollah.” Paraguayan police have seized correspondence between Barakat and

the Lebanese Hezbollah leader Hassan Nasrallah. Nasrallah’s letters thank Barakat for
this suggestive material, the statement of the Grupo 3 1 (Brazil, Argentina, Parag

and the United States) at the 3rd Inter-American Conference Against Terrorism 

they had detected “no terrorist activity or dormant cells in the triborder area” lea

room for further detective work. (The North Americans at the El Salvador meeti

not share the sanguine view of their South American colleagues.)32

The outright elimination of empty spaces, lawless areas, and collapsed states wou

necessarily end the terrorist and criminal threats. Almost all of the activities rela

terrorism and organized crime take place, to varying degrees, in large urban cent

There is usually a well-oiled relationship between the operatives in urban centers 

those settled in lawless areas, so that an active fight against criminal activities an

rorists at a specific geographical point can momentarily break the circuit but not 

the problem. The solution requires complex, phased approaches that we will des

below.

Suriname’s “Cocaine Highway”

Suriname stands as one of the most intriguing and challenging cases in this inve

tion. Information and reporting on Suriname is scarce, and the Netherlands evin

tle interest in its former colony of “Dutch Guiana.”

A small country of 160,000 square kilometers—the size of the state of Georg

Suriname has a population of just 437,000, but its geographical position places i

privileged position: facing the Caribbean as well as Europe and the United States

borders Brazil, Guyana, and French Guiana. Because of its colonial heritage, Suri

is also linked to the former Dutch East Indies (now Indonesia), which, as we shal

below, has fostered a Surinamese al-Qa‘ida link to Jemaah Islamiyah. Suriname’s 

areas are concentrated in the northern part, near the coasts. To the south, where 

shares a densely forested border with Brazil, towns and villages are scattered, ma

this zone ideal for clandestine airstrips.

Suriname received its independence from Holland in 1975. The parliamentary go

ment installed that year was removed in 1980 by the so-called sergeants’ coup. O

the sergeants would become the strongman in Suriname: Desi Bouterse. Though 

had mixed fortunes—successively challenged by insurgencies (“the Jungle Commando”) and putsches (“the telephone coup”)—he is now a colonel, controlling 

of the cocaine traffic that flows to Europe and the United States, as well as illegal 

traffic from the Suriname armed forces to the FARC rebels in Colombia. A milita

tion led by Bouterse won Surinamese elections in 1996, forming a government w

several ministers accused of drug and arms trafficking.

+
ties were forged in 1982 by Henk Herrenberg, who resurfaced in 1999 as Suriname’s

ambassador to the People’s Republic of China (PRC), where the Suriname armed force

procure much of their weaponry. In Beijing, Herrenberg is accused of selling

Surinamese passports to Chinese citizens.33 There is probably an al-Qa‘ida presence in

Suriname because of the large Lebanese community. Indeed, in November 2003, the

Washington Times reported that Latin American–based U.S. law enforcement agents

had detected “a documented movement of Al-Qaeda” in an unnamed country. That

country was probably Suriname, which—in the same article—the U.S. agents dubbed

an “emerging terrorist threat.” Thirty-five percent of Suriname’s population is Muslim

they reasoned, “with a historical nexus to Indonesia, the home of Jemaah Islamiyah,

which is affiliated with al-Qaeda and responsible for the [2002] Bali bombing.”

34

In 1999 a curious collapse of the currency—the Suriname guilder—occurred when a

Surinamese shipment of 700 kilograms of Colombian cocaine was confiscated by the

Dutch police at Schipol Airport in Amsterdam. Apparently, the Suriname government’

need to cover the thirty-five-million-dollar loss wiped out the country’s entire foreign

exchange reserve. The embarrassing rout of the currency helped elect Ronald Venetiaan

president over Bouterse’s disgraced candidate in August 2000. With assistance from the

Netherlands, Venetiaan has implemented a new fiscal and economic control program.

For Brazil, the persistence of Suriname’s arms and drug trafficking constitutes a regional problem, for, as the U.S. State Department recently asserted in its International

Narcotics Control Strategy Report, the Surinamese police are running a profitable armsfor-cocaine operation with the FARC and any other buyers who present themselves:

one kilogram of cocaine per automatic weapon.35 The UN’s Drug Control Caribbean

Coordination Mechanism has also noted “a growth in Suriname’s regional role in drug

trafficking.” In past years, drugs had only been a local problem. Today criminal organizations from Russia, Ukraine, Turkey, Nigeria, and Colombia operate freely in the

country. Desi Bouterse and his son Dino allegedly run the operations of the so-called

Suri Kartel, which trades with a number of Colombian groups. Dino had previously

worked in Suriname’s Brazilian embassy, where he was expelled for criminal abuses of

his diplomatic immunity.

In August 2002, questions were raised as to how the Suri Kartel’s operations would be

affected by the activation of Brazil’s Amazon Region Radar Surveillance System

(SIVAM), which theoretically monitors all flights traversing the Amazonian region. It i

common knowledge that the cartel uses small and medium planes to fly from Suriname to Colombia and back, making two stops in the Amazon forests. Yet it remains an

open question what form of interception Brazil will employ. Presidents Fernando
down law (and the Brazilian Congress has passed one), but Brasilia has hesitate

implement such a draconian measure because of U.S. opposition. (If Brazil doe

plement the law, the United States—protective of international flight conventio

will block the export of critical airspace control equipment.)36 If ever enacted, 

aggressive Brazilian countermeasures will force the drug lords to a long, compl

detour, probably over Venezuela, which will immensely complicate the logistics 

their operations.37

Suriname’s close relationship with the PRC is notable. In July 2002, a delegation 

Chinese Army High Command made a trip to Suriname to establish a jungle com

training center. If this initiative broadens, Chinese troops could be placed in Sur

and the trafficking of Chinese arms would be even more fluid than it already is.

Many of the above findings have been confirmed or enriched by court documen

the trial of Leonardo Dias Mendonça in the Brazilian state of Mato Grosso in 20

2003. The documents, signed by Judge Antonio Veloso Pelejera, outline in detail 

operations of the drug smugglers on the Colombia-Suriname-Brazil circuit.38

In brief, the drug-smuggling operations move between bases and runways in Col

bia’s Barranco Minas, Suriname, and Mato Grosso. They are key components of 

FARC financing scheme—hence U.S. Attorney General John Ashcroft’s repeated 

to extradite Dias Mendonça to the United States.

The accused in the case are Leonardo “Leo” Dias Mendonça and Osmar Anastasi

was the boss of the group; Osmar was one of the pilots who made regular use of 

cocaine air corridor.

39 Osmar confessed that he collaborated in smuggling into B

327 kilograms of cocaine, which were confiscated at the fazenda (ranch) “Coro F

in the state of Mato Grosso. The ranch is owned by Ceibal de Padua Santome, wh

sequently confessed that he had supplied aviation fuel for the trip from his ranch 

Colombia.40 Osmar also described in detail the flights that transported the cocain

from Colombia to Suriname. The flights went twice a week or every other week, 

pending on demand. The planes were loaded with a dozen fifty-liter gas cans to e

their range. Each flight carried about 250 kilograms of cocaine, and the two pilo

paid a total of fifteen thousand dollars U.S. The plane’s owner was paid thirty-fiv

thousand dollars. The crew would leave Brazil at 1400 to reach Colombia after d

daybreak the next day, they would depart for Suriname.41 With each landing in C

bia, they paid ten thousand dollars to the FARC, which operates and taxes the air

in Barranco Minas.42

Usually the planes departed Brazil from São Miguel do Araguia (state of Goias); 

times they left from clandestine airstrips in the state of Mato Grosso. Loaded wit
they loaded cocaine and more fuel; then they flew seven hours to Suriname. Other

times the planes left from Brazil to Suriname, where they loaded packs of U.S. dollars,

flew on to Colombia, and returned to Suriname with a large cargo of cocaine: one-kilo

bags of cocaine packed in thirty-kilo cartons, as many as the plane could carry.

43 Osma

Anastasio maintained that Leonardo Dias Mendonça was a business partner of Desi

Bouterse in the cocaine-smuggling operations. Dino Bouterse was known as “the Com

mander.” The Dutch police added that Leonardo and the Bouterses regularly traded the

cocaine ($2,500 per kilo) for automatic weapons and heavy machine guns, which they

then delivered to the FARC. Melvin Linscheer, chief of Suriname’s intelligence, reportedly directed Leo to clandestine airstrips, including an abandoned military airfield

called “Kamp 52.” Another defendant testified that Etienne Bourenveen—a Suriname

Ministry of Defense official—gave Leo five hundred Chinese weapons from army

stockpiles, which were then delivered to the FARC.44

For its part, Brazil has responded to the threat with beefed-up federal police operation

along its entire northern border. To their dismay, the Brazilians have discovered even

tiny Amazon villages overrun and used by the FARC or other drug traffickers. The

frontiers with Venezuela, Suriname, and Colombia are regarded as wide open, as is almost inevitable given the vast spaces. Brazil’s border with Colombia alone runs 1,645

kilometers, and the FARC has planted coca and poppy plantations all along it. “We are

increasing the control and repression efforts to our maximum capacity to prevent

Brazil from becoming a transit country for so many types of drugs,” a senior Brazilian

police official told O Estado de São Paolo in April 2003. It is probably too little, too late

the federal police, like so many organs of the Brazilian state, are suffering through a financial crisis and, by their own admission, cannot keep pace with the traffickers.45

Overall, Suriname represents a specific kind of Latin American threat: the accomplice

state infiltrated by “official criminals” eager to place their powers and immunities at

the disposal of mafias, traffickers, and terrorists.

Colombia: Perennial Victim State

Colombia, of course, is the “market maker” for Surinamese crime, and the troubles in

Colombia constitute the most glaring threat to hemispheric security. The conflict has

thus far defied geographical containment, spilling beyond Colombia’s borders into

Darien (Panama), Lago Agrio (Ecuador), Peru, and the region bordering Venezuela.

Brazil, deeply worried by the crisis, has thus far proven helpless to prevent “spillover”

into the Amazonian region. Forty percent of Colombia’s national territory—including

cities and rural areas—is controlled not by the government, but by the guerillas or

paramilitaries, a lack of control exacerbated by the softness and permeability of the fiv
the trend, the recent record of Colombia has been that of a nearly failed state wit

control over large parts of its territory.

There are, of course, historical and military reasons for this. Since the 1970s, the 

wing guerillas of the FARC and the ELN and the right-wing paramilitaries of the 

have aimed to conquer and consolidate territorial enclaves. Today there are roug

eighteen thousand FARC guerillas, five thousand ELN paramilitaries, and twelve 

sand AUC paramilitaries in action. All of the militias have gradually subordinate

political programs—communist revolution on the left, defense of the elitist statu

on the right—to an economic program of cocaine and heroin production, suppl

mented, in the case of the paramilitaries, by generous contributions from cattle r

ers. In this way they are scarcely distinguishable from the approximately 162 fore

and domestic drug cartels based in Colombia.46 Colombia produces 580 tons of c

a year; rebels like the FARC live not from popular support, but from an estimate

hundred million dollars in annual drug revenues. The right-wing AUC gleans at 

70 percent of its funding from cocaine and heroin.47 To bolster these revenues, th

rillas, paramilitaries, and cartels have physically chipped away at the Colombian 

to make room for coca and poppy plantations, which have increased from thirtee

thousand hectares in 1983 to two hundred thousand today. Murders and kidnapp

to dissuade the reimposition of state control have risen proportionately: thirty-f

thousand homicides and three thousand kidnappings last year, and 1.5 million te

refugees driven from their villages and towns to city slums by the narcos. No less 

60 percent of the world’s kidnappings occur in Colombia, and the refugee influx 

evil byproduct: it facilitates FARC efforts to “urbanize” the civil war, by infiltrat

guerillas into the villas.48 The kidnappings exert obvious pressure on the victim

also on families and friends, enabling the kidnapper to coerce an entire village

or region.

Unable to enforce the law or even preserve the lives of its citizens, Colombia is m

by these high levels of violence and a culture in which powerful organized crime 

ments converge with insurgent movements. At the same time, the justice system 

pears under the rule of plata o plomo, “money or lead.” The entire economic

infrastructure of the country is under near-permanent attack: roads, airports, oi

lines, and electricity grids. FARC and ELN attacks on oil facilities are part of a br

strategy to bankrupt Bogotá (which must repeatedly rebuild the damaged assets) 

eventually annex oil- and coffee-producing regions. The guerillas have wrought 

logical holocaust over the years, cutting 2.4 million hectares of tropical rain fore

spilling 2.2 billion barrels of oil into Colombia’s rivers, and dumping an estimate

hundred million liters of pesticides and chemical precursors into Colombia’s soi
the damage is devastating.

The guerillas flagrantly misuse Colombia’s 9,200 kilometers of international borders,

using the frontiers with Ecuador, Peru, Brazil, Venezuela, and Panama for rear-area logistical support and so-called mobility corridors beyond the reach of the Colombian

military. Foreign firms—especially Americans—have been targeted as collaborators.

Last year, poor Colombia shed 8 percent of its GDP this way, at a time when every centavo is needed to develop the country.

49

Though operating separately, the two left-wing armies—FARC and ELN—and the

right-wing AUC share a basic strategy: by terrorism, illegal financing, diplomatic overtures to sympathetic foreign governments and NGOs, and attacks on the Colombian

armed forces, they seek to create a failed state that would leave them free to pursue

their illegal activities. With the Colombian state and military in tatters, the legal economy paralyzed, and the populace cowed and terrified, the guerillas would be free to

consolidate their territory and expand their business and power. For the FARC, all of

this is accomplished under the guise of “popular sovereignty” in so-called freedom

areas. Mayors, judges, and governors are slaughtered to undermine the state and give the

guerillas a veneer of political ideology: they are selflessly returning power to the people

constructing a “New Colombia” from virtuous “Bolivarian circles.”

50 The paramilitarie

have been no less ruthless in the opposite direction: they slaughter hundreds of peasants every year, seeking to tear the FARC and ELN up by their roots. Until now, the

guerillas have had a relatively easy time of it. All of them established their bases in the

wild, thinly populated Colombian southeast, where labs, trails, camps, and river transport have been easily concealed beneath 135,000 square miles of tropical forest that are

impervious to satellites or infrared sensors. The guerillas had little to fear from the

pre–Plan Colombia Colombian military, which lacked the sensors, helicopters, and aircraft needed for the mobile-strike operations now under way. The FARC also benefited

from overt Venezuelan support. With several bases on the Venezuelan side of the 1,400

mile border, the FARC has more than just a safe haven for operations in Colombia.

According to the New York Times, it sometimes receives close air support from the Ven

ezuelan air force in battles with the AUC paramilitaries. Using cocaine and drug money,

the FARC regularly purchases guns and ammunition from Venezuelan officers.51

Carlos Castaño’s AUC is more complex. Sensing Uribe’s resolve, Castaño tried to “com

in from the cold,” proclaiming a cease-fire (vis-à-vis the government) in December

2002 and urging the AUC’s regional armies or “blocks” to cease their drug operations

and revert to their original mission of holding the line against FARC revolution.52

Castaño, who vanished under mysterious circumstances in May 2004, was reacting to
militaries alike have been shunned as terrorists. The FARC and the ELN have been 

visas by a previously supportive European Union, and Washington has blackliste

ens of paramilitaries previously viewed as allies in the struggle against the FARC

AUC grandees like Castaño and Salvatore Mancuso, who have obvious political a

tions in a revived and pacified Colombia, can probably not disarm and neutraliz

paramilitary commanders eager to cash in before order is restored. Castaño is belie

have been kidnapped and murdered by his own militias, who feared that he would 

AUC drug operations to the Americans.54 Moreover, many doubt Castaño’s sinceri

Many of his paramilitaries work with the FARC to grow and traffic drugs. As the 

dent paramilitary commander “Rodrigo 00” declared in July 2003, “The AUC [co

tinue to] talk like narcos, live like narcos and act like narcos.”

55 Also, though seve

thousand paramilitaries demobilized in late 2003, it was discovered that their nu

concealed a significant number of FARC kingpins, who purchased “AUC franchi

took amnesty as ex-paramilitaries, and thereby won legal immunity to launder d

money and take title to land used for drug cultivation.56

Against these mounting threats, Colombia under Uribe fights for its soul. It has n

generated to the level of a failed state in the sense of classic models such as Soma

ghanistan, and Sierra Leone.57 Rather, the Colombian state, still threatened by th

corrosive power of corruption, is struggling to recover its balance, especially in th

fight against the guerillas. Among the mass of voters, the idea of a Colombian na

still persists, and the continuity of a strictly civilian governing elite ensures a deg

stability. Furthermore, Uribe has refreshingly “formalized the idea that the fight 

waged by fighting, not by talking” and has forced the Colombian military to take 

previously written-off regions, like the Colombian-Peruvian Amazon.58

President Uribe is winning the guerilla war with an apparently effective two-trac

strategy: increased military pressure twinned with psychological/humanitarian o

tions to provoke guerilla desertions and reintegrate the resultant deserters into c

ciety. On the military track, operations have intensified thanks to U.S. assistance

first five months of 2003 alone, the Colombian armed forces killed or captured 1

guerillas, a historically high rate of attrition. A U.S.-assisted “decapitation strateg

sulted in the death or capture of at least six senior guerilla leaders in 2003. In Jun

Uribe swore in ten thousand “peasant militiamen” to guard the villages, and aeri

migation has cut Colombia’s coca production for the first time in ten years. (Figu

poppy production are less clear.)59 American officials estimate that by 2005 the sp

program will reduce Colombia’s coca harvest to less than one-fourth the acreage

planted in 2000. The Colombian vice president told the U.S. Senate in June that 

gal drug crops would be eradicated by 2006.60 This is probably overly optimistic. 
vast plantations targeted for spraying to smaller, isolated farms planted with more potent strains of coca that yield more cocaine from fewer plants. They have created new

markets in Brazil and Europe, which now consume as much crack and cocaine as the

United States, further spurring the illicit demand that eats away at the Colombian state.61

On the humanitarian track, Bogotá’s reinsertion program—begun by Pastrana in 1998

but quadrupled by Uribe—had fomented 720 FARC desertions by June 2003. With a

“reinsertion” budget of $14 million, Uribe aims for no less than six thousand desertions this year: one-fifth of the guerillas’ total strength. Though he is far from his target, he has provoked more desertions in the past nine months from the FARC, the ELN

and the AUC than in the previous three years combined. There are military and philosophical reasons for this: communist ideologues resent the hypocrisy of the FARC

struggle, which is now focused on drugs. Carlos Plotter, a FARC officer who turned

himself in under Uribe’s program, declared in June 2004 that “the humanism that attracted me to the FARC [in the early 1990s] is gone. Nothing is worse than a guerrilla

with money.”

62 Yet most FARC deserters are simply teenagers who have known only the

relative peace of the years before Uribe and are unprepared for the efficiency of the

army’s attacks or the ferocity of the AUC’s mopping-up operations.63

Still, the Colombian military continues to reorganize. Uribe has promised to insert the

Colombian military into all of the nation’s 1,098 municipalities, cease all cooperation

with the right-wing AUC, and increase the army from sixty thousand to one hundred

thousand troops by taxing the wealthy, conscripting high school graduates (previously

exempt), and conscribing peasant militias. Predictably, the FARC has turned its attacks

on the new militias to demoralize them. There are other hurdles to cross: the straitened

nation is spending just 1.9 percent of GDP on defense, and assigning just 54 percent of

its military personnel to the guerilla war, just 6 percent to border patrol. Whereas

countries like El Salvador, Pakistan, and Syria have one troop per square kilometer, the

ratio in Colombia is one-to-eight, which tends to relax pressure on the narco-guerillas.64

We would most accurately classify Colombia as a victim state, with only some of the

characteristics of a failed state. Energetic U.S. intervention, which comes in the form o

military and economic aid, has staved off the worst effects of drug smugglers, terrorists, and occasional Venezuelan support for the FARC. Authors that specialize in the

subject of failed states—Hellman and Rattner, Rotberg, and Woodward—have found

that such outside intervention is the quickest way to prevent collapse. As Rotberg puts

it, “Strengthening weak states against failure is far easier than reviving them after they

have definitively failed or collapsed.”

65 Since the start of Plan Colombia in 1999, Bogo

tá has become the third-largest recipient of U.S. military aid, after Israel and Egypt:
Plan Colombia, American aid has clearly helped turn the tide. Still, Colombia ne

more than just military aid to recover from a civil war begun more than fifty yea

in 1948.67

Colombia is a democracy under siege from guerilla groups that terrorize the civi

ulation, subvert institutions, and ignore the constitution. Provinces like oil-rich 

in the northeast have become virtual free-fire zones, with a murder rate of 160 k

per one hundred thousand citizens—double that of the 1990s, and thirty times t

rate. The popularity of the guerillas has plunged from a steady 80 percent in the 

to barely 2 percent today.

68 Massacres are depressingly routine in some provinces

where the FARC and paramilitaries wipe out each other’s peasant growers.69 The 

economy has been ruined by war, with twenty-eight million Colombians—60 pe

of the population—living in extreme poverty. In 2003, the FARC, ELN, and right

paramilitaries abruptly pushed the war into indigenous areas (25 percent of Colo

bian territory), killing dozens of indigenous and black leaders to gain control of 

land.70 They have pushed the war into and across all of the nation’s international 

tiers. There are rebel camps in Panama, Ecuador, and Venezuela, and fund-raisin

works in Brazil that traffic in arms, drugs, and gold.71 In late 2003, FARC agents

attempted to purchase Nicaragua’s entire arsenal of SAM-7, SAM-8, and SAM-9 sh

fired missiles, 2,116 missiles in all.72 This might be, as Jane’s Terrorism and Securi

Monitor conjectured a month before the alleged purchase attempt, an example o

“Western intelligence’s worst nightmare...that Islamic militants will make comm

cause with indigenous revolutionary movements and narcotics-traffickers [like t

FARC] to pool resources.”

73

All of this adds up to a severe military and terrorist threat. However, nonmilitary

strands must also be woven into the threat analysis. Bogotá’s political and bureau

machinery—some of which lends credibility to FARC demands for a “New Colom

must be reconstituted on a cleaner, more efficient basis. One reason given for Co

bian defense minister Marta Lucia Ramirez’s abrupt resignation in November 20

her inability to account for three tons of cocaine taken from police storage. (Tho

personally innocent, the minister had never been informed of the scandal.)74 Col

bia’s budget must be restrained and labor, pension, and banking laws reformed. T

fight against corruption must be waged mercilessly to return credibility to the st

The military has been involved in many scandals (like that of early 2003, when C

bian army officers were tried for diverting 7,640 Bulgarian AK-47s to the AUC p

militaries), and dozens of Colombian senators and deputies owe their seats to dr

money.

75 Sanity must be restored to basic administration. The Colombian guerill

paramilitaries receive millions of dollars a year in Colombian oil revenue from th
contractors, and local politicians channel the money to local guerillas rather than local

schools and other social programs.76

Uribe, recognizing that judicial efficiency and official probity are necessary preconditions to any Colombian renaissance, seems to be working hard at efficiency and accountability. He has pledged 113 trillion pesos over the next four years for regional

development and the creation of what his planners call a “community state,” one less

riven by wealth and class.77 His handling of the Colombian army’s botched hostage rescue operation in May 2003 was emblematic of the new accountability. Rather than

sweep the failure under the carpet, Uribe, pledged to “openness and transparency,”

forced the army chief and another senior general to go on national television to explain

the debacle. Similarly, when two of Colombia’s elite counternarcotic companies stole

an estimated $14 million in captured FARC funds in May, Uribe deliberately broadcast

the scandal, to show Colombians his determination to enforce honesty in the Colombian military, police, and civil administration. Uribe is the first Colombian president to

hold the army’s feet to the fire: though the army had captured or killed few FARC com

manders in forty years of civil war, they got five in the fall of 2003 alone, a surge attributable to the president’s personal attention.78

Meanwhile, money must be poured into the educational system, to forge real “citizens.

As Alejandro Santos Rubino—editor-in-chief of Colombia’s most influential newsmagazine—put it at a Social Forum meeting in Bogotá in 2002, “Is a country in which

60 percent of the people live below the poverty line a viable country? Twenty-eight mil

lion Colombians do not know a thing about ideology, visas, economic deficits or even

human dignity.”

79 Uribe, new on the scene when Rubino spoke those words, recognizes

the danger of this; indeed, his vaunted reinsertion program is founded on an appreciation of education and civil responsibility. Guerilla deserters are pardoned, taught to

read and write, provided vocational training, and then released into society with a stipend of two thousand dollars. A nation-state is, in effect, reinventing itself.

Armed Forces and the Lawless Areas

The fight against terrorist and organized crime networks will demand technical and in

telligence capabilities more than raw force. It will also require a sophisticated level of

cooperation among Latin American ministries, militaries, and security services. Improved systems of regional cooperation will also aid in the fight against terror cells and

criminal organizations.

Improved systems and methods cost money. Latin American defense ministers have

rather too optimistically judged their region a “haven of peace” and are spending little
fear from the region’s obsolete militaries. (In real dollars, the region’s four major 

ers have reduced their arms purchases 40 percent over the past decade.)81 It is fac

argue that Latin America’s problems are not military. They are, of course, econom

social, and political, but military weakness opens the door to transnational intru

Brazil is a good example of this. After subtracting salaries and pensions from Bra

already-tiny twenty-nine billion real defense budget, the nation is left in 2003 wi

five billion reals (US$1.7 billion) for operations and procurement. Only ten thou

of the army’s one hundred thousand troops are deployed in the Amazon region, 

the rest of the force is constitutionally forbidden to operate against the gangs in 

favelas or any other internal enemies. Asked in January 2003 whether it was not t

for Brazil to reform its unskilled conscript army into a smaller professional force 

to cope with the new threats, defense minister José Viegas Filho replied, “No.” Th

army, he said, must continue to function as a school of the nation, integrating “w

blacks, mulattos and Indians.”

82 Such words are probably balm to the spirits of te

ists and traffickers, who can make the most of Brazil’s weakness in the Amazon—

big cities and the border areas. Against an army pledged not to operate internally 

federal police force of just seven thousand men (two thousand of whom sit in of

criminals have room for maneuver and growth in Brazil.83

North and South: Different Perceptions and Priorities

Latin America remains a relatively low priority issue in Washington, whose chief 

spheric security concerns are Venezuelan oil and narco-terrorism in Colombia. Un

nately, most other countries in the region resent these narrow, self-interested prior

Compared with the advances in economic and trade integration, defense and secu

areas in which nationalist tendencies take longer to change and where effective con

is harder to build.

For Americans, September 11 created a turning point of sorts. With al-Qa‘ida sp

sixty countries, Washington began to look more closely at endangered or embatt

victim and accomplice states in the hemisphere. Facing the difficulties of engagin

organization with the characteristics of al-Qa‘ida, a network of networks that sn

through several dozen countries, the United States has decided that each nation-

must take responsibility for what happens inside its borders. As British prime mi

Tony Blair put it in July 2003, “The right to sovereignty brings associated respon

ties to protect citizens.”

84

In select cases—chiefly Colombia—Washington is paying more attention to Lati

America. Latin America, however, deplores this kind of attention, for the region 

quite different concerns. Brazil worries that Colombia’s civil war is but a pretext 
Brazil has its own lawless border area with Colombia, one that threatens to spread deep

into the heart of Brazil. Like the tri-border area, Tabatinga/Leticia, at the southern end

of the 1,600-kilometer Brazil-Colombia border, has been a lawless area and haven for

organized criminals for ten years, a market for drugs and weapons and a favorite

route—along the Amazon—for the shipment of the chemical precursors needed for

cocaine and heroin production in Colombian laboratories.85 Aside from four army out

posts around Manaus, the Brazilians have done little to contain the infection. With a

strict policy of “nonintervention” in Colombian affairs, Brazilian outposts—isolated

and poorly linked—can do nothing anyway. Though Brazil is adding thirteen jungle

bases and increasing its troop strength in the Amazon region to 26,000, such a force

scarcely registers in a sprawling jungle of 2.12 million square miles.86

In Foz do Iguaçu, Tabatinga, and elsewhere, national and regional security will be a

sensitive matter for Brazil, and cooperation with the United States is neither natural

nor assured. President Lula da Silva must first focus on social and economic problems.

One-third of Brazil’s 175 million citizens live on less than one dollar a day, and onefifth of the population is illiterate. Da Silva’s “war on hunger” will precede a war on

anything else, including terrorists. His June 2003 proposal to tax international arms

sales and third-world debt repayments to remove the “structural causes of world hunger” gives a glimpse of his methods and priorities.87 Brazil also fears unchecked American “hyperpower,” which might one day impinge on Brazilian interests or—in the case

of Foz do Iguaçu or the Amazon—even Brazilian territory.

88 A leading Brazilian congressman has called it “a tragedy to have U.S. soldiers in South America,” and Brazil’s

overt support for Hugo Chávez in Venezuela’s December 2002 crisis was a clear signal

that da Silva may view Chávez as a potential geopolitical makeweight against American

encroachments in Colombia, Ecuador, Peru, Bolivia, and Chile. Similarly, Brazil’s recent call for “total defense integration” with Argentina is likely to be warmly received

by President Nestor Kirchner, who has publicly decried the Argentine-American “carnal relations” of the Carlos Menem years.89

Mexico abandoned the Cold War–era Rio Treaty in 2002, on the grounds that the chief

threats to the region are not military, but social and economic. Mexico resents Washington’s focus on drugs and terrorism, and its refusal to conclude a new, post–September

11 immigration agreement, relax import restrictions on agricultural products, or legalize the status of the estimated three million undocumented Mexican workers in

the United States. President Vicente Fox, who began his presidency in 2000 vowing to

work in tandem with President Bush, has tacked away since the Iraq War. Fox, the former Coca-Cola executive, spurned Washington’s efforts to get an additional UN resolu

tion to authorize the use of force against Saddam Hussein and looks increasingly to
rity Council, and some “diversification” of Mexican exports, 90 percent of which go 

United States.90 Mexico does not view terrorist cells as an urgent threat. Indeed, in Oc

2003, Mexico’s foreign secretary publicly accused the United States—at an Organiz

of American States (OAS) security conference—of “seeking to militarize the OAS.”

In Venezuela, the ongoing struggle between President Hugo Chávez and his fract

opposition leaves Caracas incapable of defending (or unwilling to defend) its 2

kilometer FARC-ridden border with Colombia, or of implementing effective cou

measures against organized crime and terrorism in its own territory.

92 If Chávez—pr

until at least 2006—continues to stoke the civil war in Colombia, he may find him

conflict with the United States. He tolerates fifteen FARC camps and four of the 

permanent presence of up to two thousand men, and scores of kidnap victims in

Venezuela.93 Chávez makes no secret of his support for the FARC against Colomb

“rancid oligarchs” and has even supported a FARC-modeled kidnap and extortio

force called the Fuerzas Bolivarianas de Liberacion (FBL). There are an estimated 

hundred FBL guerillas; they prey on wealthy Venezuelan ranchers and may be th

of a future Chávez resistance, should he be driven from power.

94 Chávez also exis

curious symbiosis with Fidel Castro’s Cuba. In return for fifty-three thousand ba

of Venezuelan oil per month, Castro staffs Venezuela’s intelligence and paramilit

arms with thousands of operatives and advisers.95

In Ecuador, where another populist regime was inaugurated in January 2003, soc

tensions are worsening in the midst of a serious economic meltdown, occasioned 

part by Ecuador’s adoption of the dollar in 1999. As neighbors devalue their nati

currencies, dollarized Ecuador loses jobs and competitiveness. In the 2002 presid

elections, Ecuadorians faced a stark and rather unappealing choice, between a lef

populist (a former army colonel who had led a coup against democratically elect

president Jamil Mahuad in January 2002) and a right-wing populist (a banana b

accused of enslaving children on his plantations). The retired colonel, Lucio Gut

won in a ballot that The Economist dryly called “a choice between Hugo Chávez a

Silvio Berlusconi.”

96

Gutiérrez has since embarked on a struggle against what he calls Ecuador’s “corr

oligarchy.” In fact, he is just the latest example of what the University of Lima’s E

Ghersi calls the “modern caudillos,” men like Hugo Chávez, Efrain Rios-Montt, a

Evo Morales, “who lead what they know will be failed revolutions in order to bec

democratic candidates against the system.”

97 Gutiérrez is hard-pressed politically

his armed and security forces are stretched to the limit, between the reappearanc

Sendero Luminoso on Ecuador’s Peruvian border and the FARC’s presence on the
There the FARC and Ecuadorian criminals have created another lawless area, Lago

Agrio, where the FARC shelters from Colombian army offensives and barters drugs for

weapons and bomb-making materials with impunity. Like other lawless areas, Lago

Agrio is inhabited by criminals and traficantes who are better armed and motivated

than the police, gendarmes, and military who oppose them.98 Anyway, with core political support from Ecuadorian communists, radical indigenous groups, and the Maoist

Democratic Popular Movement, Gutiérrez has little room for maneuver against revolu

tionaries of any stripe. Indeed, a FARC deserter in May 2003 told his Colombian captors that Gutiérrez has “tacitly” concluded a nonaggression pact with the FARC,

permitting it bases and freedom of movement inside Ecuador in return for a pledge

not to attack Ecuadorians (and perhaps a cut of the FARC’s drug exports).99 In Novem

ber 2003, Colombia’s president accused “rogue Ecuadorian military officers” of selling

FARC rebels a rocket launcher used in a failed assassination attempt on the head of the

Colombian cattlemen’s association.100 Rated Latin America’s second most corrupt

country in 2002 (better only than Paraguay, slightly worse than Bolivia and Argentina)

Ecuador will struggle to confront its monstrous challenges in the years ahead.101

The Rio Group Summit of nineteen Latin American heads of state, convened in Cuzco

in May 2003, summarized the troubles confronting Latin American governments. As

luminaries like Chávez, da Silva, Fox, and Uribe met to discuss the problems of the region, they were drowned out by tumultuous crowds of protesters, chiefly striking

teachers and bus drivers, who pushed up to the very doors of the summit, hurling

abuse at Peruvian president Alejandro Toledo for his neglect of wages and living standards. Though Peru actually did well in 2003—4 percent growth and modest 1.5 percent inflation—populists argue that the benefits accrue only to the rich, a common

complaint on the subcontinent.102 Indeed Toledo’s embattled government—his approval rating is down to 10 percent—is just the latest victim of a Latin American trend

Fantastic as it may seem, Alan Garcia, who oversaw Peru’s wretched collapse in the

1980s, is poised for a populist comeback.

In their different ways, Peru’s Garcia, Venezuela’s Chávez, Brazil’s da Silva, Ecuador’s

Gutiérrez, Argentina’s Kirchner, and Bolivia’s Morales all represent a rejection of the socalled Washington Consensus: free markets, deregulation, privatization, and Americanbacked fiscal policies. Bolivia’s change of heart is perhaps the most alarming. Though

Bolivia nearly eradicated coca between 1997 and 2002, its acreage has bounced back to

fifteen thousand and is growing. Morales, who heads a party called “Movement Toward

Socialism,” describes himself as a man in “sharp conflict with globalization and capital

ism,” which are, in his view, “the worst enemies of mankind.” These are seductive prescriptions in a country where more than 60 percent of the population lives in grinding
2003 ended with the removal of the democratically elected president, Gonzalo Sa

de Lozada. The new president, Carlos Mesa, hesitates to act against Morales, the 

growers, and their allied, Colombian-modeled terrorist army, the Ejercito de Libe

Nacional—Bolivia (ELN-B). Indeed Mesa has already bowed to hard pressure fro

Morales, releasing a number of ELN-B terrorist suspects from jail in December 2

This development, coupled with the surge in Bolivian cocaine production and tr

ing, leaves some American officials worried that the entire nation of Bolivia is sli

toward ungoverned area status.104

With political instability, economic crisis, and swelling social pressure threatenin

mocracy itself, Latin American governments are faced with a delicate dilemma. A

though their security and governance problems go far beyond the question of law

areas and the terrorist menace, these threats will assuredly expand as transnation

tors linked to organized crime and terrorism and empowered by state complicity 

corruption extend their activities. As state power weakens and income gaps and 

exclusion widen, it is logical that drug and other crime cartels and terror networ

increase their power and capabilities. To counter such threats, Latin American na

need wide, deep reforms. Improvements in intelligence and police work, for exam

are all too often undone by decrepit judicial systems that prove too corrupt to im

ment the work of their security agencies.105 As often as not, the police themselves 

riddled with corruption. “We have two problems,” Brazilian federal police chief P

Lacerda frankly admitted in February 2003. “Police corruption and illegal arms t

The criminal is strong and powerful because he has guns to confront the police. 

police weakened by corruption becomes an easy target.”

106 Where there is a deter

effort to tighten up the police and check terrorism, liberal critics emerge to evok

memories of the “dirty wars” of the 1970s and 1980s. “What about the ‘collateral 

age’ of the war on terrorism,” Argentina’s Pagina 12 asked in January 2003. “Dam

the presumption of innocence, to precious human rights, to the rule of law. . . .W

end up corroding the democratic vessel from within.”

107 Nor do most Latin Amer

militaries want to be involved in domestic policing, which distracts them from o

external missions and carries high political risks.108

Conclusion

In the first days of his administration, President George W. Bush vowed to inaug

new “Century of the Americas.” That ideal, talked about in his first foreign trip (

Mexico), was dashed by the attacks of 11 September, which refocused American 

tion on the Middle East. Unfortunately, the terrorist menace is not confined to th

Middle East and Central Asia; it breeds in the slums and ungoverned areas of Lat
the region. There is potential for terrorist basing in all of the victim and accomplice

states and lawless areas described in this chapter, as well as in others that can be hewn

out of previously stable areas on short notice.

This joint paper has argued the need for a two-tracked approach to U.S.–Latin American security. Every effort must be made to penetrate, expose, and destroy terrorist cells

as well as their links to drug production and sales. But the hunt must be accompanied

by a kind of subtle nation-building. At the OAS meeting in June 2003, one South

American official voiced his exasperation with U.S. methods. Latin America, he complained, “has fallen off the map” for Washington, “except in connection with the war on

terrorism.”

109 Latin Americans would like to see the United States relax trade restriction

and invest in its neighbors to eliminate the conditions that support terrorists and

narcos, as well as the fervently anti-American “populist movements.” These last are social and political groupings that join human rights and environmental activists, indige

nous communities, a humiliated middle class, farmers thwarted by American tariffs (o

cheap imports), and workers impoverished by privatization, downsizing, and deregula

tion. “The strategy to apprehend Mono Jojoy [FARC leader Jorge Suarez Briceno] is far

more exciting and newsworthy than an increase in the number of classrooms,” an influ

ential Colombian wrote last year, but “the dilemma today is how to break the vicious

circle between war and poverty. Should we give priority to security in order to reactivate the economy as a way to help stamp out poverty? Or should we prioritize social in

vestments to resolve the ‘objective causes’ of violence and in this manner reactivate the

economy?” With American backing, Uribe has plumped for the former course. Regarding the latter course, Americans are leery of investing in Latin America at a time when

Latin Americans themselves refuse to invest there. It was estimated in 2003 that Latin

Americans had stashed up to seven hundred billion dollars of personal savings in U.S.

and European banks to preserve them from Argentine-style corralitos (prohibitions on

personal savings withdrawals), taxes, or expropriations.110 Needless to say, the struggle

will be as long, tiresome, and thankless as similar projects in Iraq or Afghanistan. Just

to raise Colombia’s poorest eleven million up to the poverty line will cost an estimated

2.3 percent of GDP.

111 Such work and expenditure will be the essential underpinning

for real security, let alone a “Century of the Americas.”

Overall, Islamist terrorism is a minor concern for the region. That fact was driven

home at the above-mentioned Rio Group meeting in Cuzco, Peru, in May 2003. There,

nineteen heads of government issued a “Cuzco Consensus” that differed diametrically

from Washington’s. Terrorism, fiscal austerity, and drug eradication did not even make

the list. Instead, priorities were reducing poverty and hunger, bolstering civil society,

empowering women, promoting development, deepening democracy, freeing trade in
ministers from Latin America and the Caribbean at the OAS annual assembly in 

ago, Chile, a month later, U.S. Secretary of State Colin Powell found himself quit

in emphasizing the “triple scourge” of “tyrants, traffickers and terrorists.” His co

leagues preferred to focus on a different scourge: worsening economies.113 No wo

Latin American unemployment and poverty are at twenty-year highs and living 

dards are plummeting, taking whole bands of the middle class with them.114 Was

ton must consider, among its security concerns, the fact that anti-American disc

is strengthening in the hemisphere, and is indeed the glue holding together a num

of strident populist movements.

To be sure, uncertainty will be the rule for the coming years in Latin America, bu

sistent weakness, inefficiency, and corruption—if unchecked—threaten far wors

mere “uncertainty.” Indeed, we might see an avalanche of failed or failing states a

the lines of Colombia. Having studied the self-financing, drug-peddling method

the FARC, Peru’s nearly extinct Shining Path is making a comeback in the jungle

mountains of the Apurimac River Valley and the Rio Ene region, about three hun

miles southeast of Lima. This “neo-Shining Path”—characterized by Alan Garcia 

July 2003 as “the most serious threat to [Peruvian] democracy”—has already est

lished commercial contacts with the FARC and Mexican cartels, and has adopted 

FARC financing method of abduction for ransom, kidnapping sixty gas-pipeline 

ers in June 2003. The FARC is cooperating with Shining Path, to offset its territo

losses in Colombia with Peruvian enclaves and drug trafficking routes.115 In Braz

ies, FARC instructors are reportedly trading their expertise in guerilla tactics, bom

ing, and mass prison escapes for shipments of automatic weapons and munitions.

Chile, in no danger of failing, has nevertheless become the quickest growing hub 

global drug transshipments and money laundering, after Brazil. With its relative

phisticated economy and flood of exports (30 percent of GDP), Chile provides c

and facilities for drug traffickers in neighboring Bolivia and Peru.117 Given al-Qa

recent shift to drug trafficking as a principal means of fund-raising—and its clos

study of FARC operations—these Latin American developments are troubling.

118

With its growing antiglobalization, antieradication movement, Bolivia is bending 

der tremendous pressure as FARC and Peruvian agents already on Bolivian soil d

their ties to international traffickers and move determinedly to create a failed sta

like pre-Uribe Colombia, would be more hospitable to drug production and terror

Guatemala—with the biggest population and economy in Central America—has 

into what even the normally chary UN calls “lawlessness.” Nicaragua, accused of 

arms to the Colombian guerillas in January 2003, replied that it was “the victi

an organized crime operation” that somehow infiltrated army arsenals. (Perh
vember 2003 of requesting that Nicaragua voluntarily destroy its roughly two thousand

Soviet-supplied SAM-7 shoulder-fired antiaircraft missiles lest they fall into the hands

of terrorists.)120 Simply recasting the “war on drugs” as a “war on terrorism” in no way

changes the fundamentals of any such struggle, which Powell recognized when he enjoined his Central American colleagues (in Honduras and Nicaragua) to fight “corruption and mismanagement.”

121 Two hundred and fourteen million Latin Americans live

in extreme poverty today. Looking at the region’s wretched economic growth over the

past twenty years—barely 7 percent per capita—many blame the United States and the

IMF, and meet America’s emphasis on terrorism with indifference, or sarcasm, as in the

title of Ariel Dorfman’s Chile: The Other September 11th, an account of the Pinochet

coup of September 11, 1973, and the subsequent repression.

Maybe it is time for Washington to implement new, deeper, sustained relations with th

hemisphere. Brute force and exhortations are not working; that much is clear from

Zogby and Latinobarómetro polls released in November 2003. Both indicated a doubling of Latin Americans with a negative image of the United States. In key countries,

percentages of citizens with a negative view of the United States are rising: 58 percent

in Mexico, 62 percent in Argentina, 42 percent in Brazil, and 37 percent in Chile.122 Far

more than rhetoric or police work, economic recovery, clean government, and an educated civil society remain the foundation stones for any final assault on terrorists and

drug traffickers. The American role must be steady but discreet, to allay Latin fears of

gringo overreach. As a Brazilian report concluded in January 2003, armed repression of

terrorism is only palliative. “Correcting the distortions that currently prevail on the international scene and supporting democratic values and respect for human rights will

have the most effective impact on the fight against terrorism.” On the Latin American

side, real dedication to regional security—in every dimension—is no less important.

“If we do not have a collective and regional security policy,” Brazilian academic Alfredo

Valladao wrote in February 2004, “we will merely continue as the dogs barking on the

side of the road, while the caravan passes.”

123
1.Martin Edwin Andersen, “Al-Qaeda across the

Americas,” Insight, 26 November 2001, pp.

20–21; “Brazil faces Tricky ‘War on Terror,’”

latinnews.com, 26 June 2003.

2.Elected governments have the responsibility to

exercise sovereign authority, conferred at the

ballot box, throughout their national territory.

Defense Ministerial of the Americas; statement

by Secretary of Defense Donald H. Rumsfeld,

Santiago, Chile, 19 November 2002.

3.Roger F. Noriega, remarks at the InterAmerican Defense College, 22 October 2003.

4.There are records of the settlement of alQa‘ida cells in failed or accomplice African

states, such as Sierra Leone, Burkina Faso, and

Liberia. Using those bases, the terrorists

started a new model for funding their activities: “conflict diamond” smuggling, with the

complicity of local authorities, the support of

local businessmen from Lebanon, and the involvement of the Russian mafia. Doblas Farah,

“Report Says Africans Harbored Al Qaeda

Terror Assets Hidden in Gem Buying Spree,”

Washington Post, 29 December 2002.

5. “Search Extends to Latin America,”

Stratfor.com, 19 September 2001.

6.Norberto Bobbio, Estado, gobierno y sociedad

(Buenos Aires: FCE, 2001).

7. Steven Metz, The Future of Insurgency

(Carlisle, Penna.: SSI, 1993): “Two forms of

insurgency are likely to dominate the post–

cold war world. Spiritual insurgency is the

descendant of the cold war–era revolutionary

insurgency. It will be driven by the problems

of modernization, the search for meaning, and

the pursuit of justice. The other form will be

commercial insurgency. This will be driven

less by the desire for justice than wealth. Its

psychological foundation is a warped translation of Western popular culture which equates

wealth, personal meaning, and power.”

8.Juan Forero, “Hide and Seek among the Coca

Leaves,” New York Times, June 9, 2004; Juan

Forero, “Latin American Poppy Fields Undermine US Drug Battle,” New York Times, 8

June 2003; Also: a talk by Linda Robinson, US

News & World Report Latin American bureau

chief, at the Pell Center in Newport, R.I., on 1

December 2000.

9.Hans-Joachim Spanger, The Ambiguous Lessons of State Failure, Failed States Conference,

Florence, Italy, 10–14 April 2001.

ernment’s capacity to legitimate its de

on the basis of an efficient undertakin

functions. It is relevant to point to the 

relationship among governability, leg

and efficiency. Adrián Acosta Silva,

Gobernabilidad y Democracia—Perspe

del Debate a Veinte Años del Reporte a 

Comisión Trilateral, available at http:/

www.uacj.mx/Publicaciones/noesis/

adrian.htm.

11. Fábio Wanderley Reis, “Atualidade m

desafios brasileiros,” Estudos Avançad

no. 39 (May/August 2000), pp. 14–20

12. Foreign Broadcast Information Servic

after FBIS], “Guyana Probes Romania

Weapons Origin,” ACANEFE (Panam

April 2003.

13. Robert D. Novak, “Cultivating Ferme

Bolivia,” Washington Post, 5 January 20

Ralston, “Evo Morales and Opposition 

US in Bolivia,” 14 July 2002, www.zma

14. “Brazil: Control by Criminal Gangs L

to Parallel State,” Stratfor.com, 20 Sep

2002; Matt Moffett, “Local Battle: On

Mayor Shows Argentina How to Clea

House,” Wall Street Journal, 1 July 20

15. Matthew Brzezinski, “Re-engineering 

Drug Business,” New York Times Mag

23 June 2002.

16. “New Colombian Cartel,” Stratfor.com

April 2002.

17. Capt. Juan A. Rairan, Colombian Nav

lombian Narcoterrorism’s Strategic Im

tions” (unpublished paper, U.S. Nava

College, May 2003).

18. Robert I. Rotberg, ed., When States Fa

(Princeton: Princeton Univ. Press, 20

Robert H. Jackson, Quasi States (Cam

CUP, 1990); I. William Zartman, ed., 

lapsed States (Boulder, Colo.: Lynn Ri

1995); Jeffrey Herbst, “Responding to 

Failure in Africa,” International Secur

no. 3 (Winter 1996–97); Gerald B. He

and Steven R. Ratner, “Saving Failed S

Foreign Policy 89 (Winter 1993), pp. 3

Robert Rotberg, “Failed States in a W

Terror,” Foreign Affairs (July/Aug 200

p. 127; Robert Rotberg, “The New Na

Nation-State Failure,” Washington Qu

(Summer 2002), pp. 85–96; Susan Wo

“Failed States: Warlordism and ‘Triba
(Spring 1999), p. 55.

19. Christopher Whalen, “Who Is Protecting

Hugo Chávez?” Insight, 25 November 2003.

20. Linda Robinson, “Terror Close to Home,” US

News & World Report, 6 October 2003.

21. Lucien Chauvin, “Peruvian Army Paying a

Price for Recent Role-boost by Toledo,” Miami Herald, 1 July 2003.

22. “Crime and Politics in Brazil,” Stratfor.com,

24 June 2003.

23. Scott Wilson, “Armed Attacks Increase Pressure on Haitian Leader,” Washington Post, 18

November 2003.

24. U.S. Department of Treasury press release, 10

June 2004, “Treasury Designates Islamic Extremist, Two Companies Supporting

Hizballah in Tri-Border Area”; William W.

Mendel, “Paraguay’s Ciudad del Este and the

New Centers of Gravity,” Military Review 82,

no. 2 (March–April 2002); and Mariano Cesar

Bartolome, “La Triple Frontera: Principal

Foco de Inseguridad en el Cono Sur Americano,” Military Review 82, no. 4 (July–August

2002).

25. Mendel, “Paraguay’s Ciudad del Este.”

26. Kevin G. Hall, “Duarte Returns Home Amid

Reports of a Plot,” Miami Herald, 27 January

2004.

27. Peter Hudson, “There Are No Terrorists

Here,” World Affairs 164, no. 2 (19 November

2001).

28. Larry Rohter, “South America Region under

Watch for Signs of Terrorists,” New York

Times, 15 December 2002.

29. Philip Sherwell, “Revealed: The South American Connection,” London Sunday Telegraph, 9

November 2003; “Islamist Terrorism in Latin

America,” Jane’s Terrorism and Security Monitor, 1 October 2003.

30. “Latin America: A Safe Haven for Al Qaeda?”

Stratfor.com, 4 September 2003.

31. U.S. Department of Treasury, “Treasury Designates Islamic Extremist, Two Companies

Supporting Hizballah in Tri-Border Area”;

Marcus Stern, “Terrorism Takes Root in Jungle of South America: Region Linked to Funds

for Hezbollah, Hamas,” San Diego UnionTribune, 15 June 2003; Jeffrey Goldberg, “In

the Party of God: Hezbollah Sets Up Operations in South America and the US,” New

Yorker, 28 October 2002.

zen,” ABC Color (Asuncion), 30 January 2003

FBIS, Horacio Verbitsky, “Argentine Bill to

Fight Terrorism,” Pagina 12, 26 January 2003

33. Brana Shute, “Narco Criminality in the Carib

bean” (Georgetown University talk, Washing

ton, D.C., 2000).

34. Nicholas Kralev, “OAS Balks at Defense

Treaty,” Washington Times, 1 November

2003.

35. FBIS, “Brazil: Defense Minister Viegas Discusses Shoot-down Law, FARC Activities,”

Brasilia Air Force Command, 20 May 2003.

36. FBIS, Marcia Brandao and Carla Benevides,

“US Retaliation Jeopardizes Amazon Surveillance,” Brazilian Camara dos Deputados, 30

April 2003.

37. FBIS, “Brazil: Defense Minister Viegas discusses shoot-down law, FARC activities.”

38. Kevin G. Hall, “Brazilian Drug Lord Sentenced to 23 Years for Cocaine Trafficking,”

Knight Ridder Newspapers, 22 January 2003.

39. “Sentencia Juez Antonio Veloso Pelejero.”

Poder Judicial, Estado de Mato Grosso,

Proceso 1015/2000, 13 January 2003, p. 1.

40. Ibid., p. 2.

41. Ibid., p. 12.

42. Ibid., p. 16.

43. Ibid., p. 18, 23.

44. Ibid., p. 46.

45. FBIS, Edson Luiz, “Brazil Steps Up Security to

Fight Organized Crime on Border,” O Estado

de São Paolo, 28 April 2003; “Despite Brazil’s

Efforts, Colombian War Likely to Seep Acros

the Border,” Stratfor.com, 5 March 2003.

46. Marcella, The US and Colombia: The Journey

from Ambiguity to Strategic Clarity, pp. 8–9,

21.

47. “New Drug Gangs Spreading in Colombia,”

Stratfor.com, 3 April 2002.

48. “Helping Colombia,” International Herald

Tribune, 12 May 2003; Rairan, “Colombian

Narcoterrorism’s Strategic Implications.”

49. Rairan, “Colombian Narcoterrorism’s Strategic Implications.”

50. See www.movimientobolivariano.org.

51. Linda Robinson, “Terror Close to Home,”

US News & World Report, 6 October 2003;

Juan Forero, “Colombia’s Long Civil War
Times, 1 June 2003.

52. Alma Guillermoprieto, “Letter from Colombia: Waiting for War,” New Yorker, 13 May

2002.

53. “Guerrillas—or Terrorists?” The Economist,

8 December 2001; JoAnn Kawell, “Terror’s

Latin American Profile,” NACLA Report on

the Americas 35, no. 3 (November/December

2001), pp. 52–53.

54. Margarita Martinez, “Officials: No Proof

Carlos Castaño Slain,” Stratfor.com, 30 April

2004; Ruth Morris, “Colombian Paramilitary

Leaders Announce Peace Talks,” Los Angeles

Times, 16 July 2003; “Colombian Appeals for

Peace,” Washington Times, 23 July 2003.

55. Scott Wilson, “Commander of Lost Causes,”

Washington Post, 6 July 2003; “Colombia:

Paramilitary Rifts to Lead to Violence?”

Stratfor.com, 27 May 2003.

56. Andy Webb-Vidal, “Departure of Paramilitaries Could Put the Lights Out,” Financial

Times, 15 November 2003.

57. Marcella, The US and Colombia: The Journey

from Ambiguity to Strategic Clarity, pp. 9–10.

58. “World in Brief,” Washington Post, 14 November 2003; Hernando Gomez Buendia,

“Security: Will We See Results?” Semana, 13–

19 January 2003.

59. “Colombia Enlists Peasant Soldiers,” Washington Post, 17 June 2003; T. Christian Miller,

“Major Cocaine Source Wanes,” Los Angeles

Times, 8 June 2003; Rachel Van Dongen, “The

Right Man,” New Republic, 16 June 2003.

60. Bryan Bender, “Visible Cracks: NarcoTerrorism in Colombia,” Jane’s Defence

Weekly 40, no. 3 (9 July 2003); Guy Dinmore,

“Colombia Plans to Eradicate Drug Crop in

Three Years,” Financial Times, 4 June 2003.

61. Forero, “Hide and Seek among the Coca

Leaves.”

62. Frank Davies, “Rebel Says He Defected over

Drug Ties,” Miami Herald, 17 June 2004.

63. FBIS, Jorge Lesmes, “Colombian Military

Leaders Proclaim Guerrillas’ Defeat,” El

Espectador (Bogotá), 4 May 2003; Frances

Robles, “Colombian Civil War Weapon:

Coaxing Guerrillas to Desert,” Miami Herald,

16 June 2003; Rachel Van Dongen, “Colombian Rebels Abandon Arms,” Christian Science

Monitor, 28 May 2003.

Wanes,” Los Angeles Times, 8 June 200

chel Van Dongen, “The Right Man,” N

public, 16 June 2003; Rairan, “Colomb

Narcoterrorism’s Strategic Implicatio

65. Rotberg, “The New Nature,” p. 94.

66. Forero, “Hide and Seek among the Co

Leaves”; Jason Hagen, “The Colombia

mire,” Baltimore Sun, 8 June 2003.

67. Marcella, The US and Colombia: The J

from Ambiguity to Strategic Clarity, p. 

68. Rairan, “Colombian Narcoterrorism’s 

gic Implications.”

69. Juan Forero, “Attack by Colombia Re

Threaten Fragile Talks,” New York Tim

June 2004.

70. Rachel Van Dongen, “Colombian Trib

Caught in the Middle,” Los Angeles Ti

May 2003.

71. Juan Forero, “Colombia’s Long Civil W

Spreads Turmoil to Venezuela,” New 

Times, 1 June 2003.

72. “FARC Offer to Buy Missiles Reported

ami Herald, 9 November 2003; “Nicar

Missile Danger,” Los Angeles Times, 8 

ber 2003.

73. “Islamist Terrorism in Latin America,

Terrorism and Security Monitor, 1 Oct

2003.

74. Juan Forero, “Pressure Cited as Colom

Resigns Post,” New York Times, 11 No

2003.

75. “Colombian Officers Go on Trial on C

of Trafficking in Bulgarian Weapons,”

Semana, 23 January 2003; “New Drug 

Spreading in Colombia,” Stratfor.com

2002.

76. Dan Molinski, “Colombia Admits Th

Money Sometimes Ends Up with Reb

Wall Street Journal, 4 February 2003.

77. “The Development Plan Piñata,” El Es

(Bogotá), 11 May 2003.

78. “Colombian Soldiers Stole Millions in 

Money,” Washington Post, 21 May 200

lombian Army Theft Hampers Reform 

forts,” Financial Times, 22 May 2003; 

America Briefs,” Miami Herald, 5 Nov

2003.

79. Alejandro Santos Rubino, “Semana D

on Colombia’s Inability to Resolve So

sis,” Semana, 3–9 February 2002.
Brazil,” ACANEFE (Panama) 23 April 2003.

81. “Defence Market Latin America,” Armada International, April/May 2003, pp. 35–48.

82. FBIS, “Brazilian Defense Minister’s Views on

Role of Armed Forces,” O Estado de São Paolo,

13 January 2003.

83. FBIS, Valteno de Oliveira, “New Federal Police Chief Says Priority Is to Fight Arms Trafficking,” Brasilia Correio Braziliense, 2

February 2003.

84. Andrew Sparrow, “Blair ‘Will Back Policy of

Armed Invasion’?” Daily Telegraph, 14 July

2003.

85. Guillermoprieto, “Letter from Colombia:

Waiting for War.”

86. FBIS, “Brazil to Strengthen Border Security

with 13 New Bases,” Madrid EFE, 4 May 2003.

87. “Lula Proposes Hunger Fund,” www.bbc.co.uk.

88. FBIS, Paulo Paiva, “Brazilian Government

Applauds Mexico’s Postponement of Security

Conference,” São Paolo Gazeta Mercantil, 5

May 2003; “Rebel Recruiting Suspected,”

Washington Post, 22 May 2003.

89. “Brazilian Leader Backs Chavez in Venezuela

Crisis,” Stratfor.com, 19 December 2002;

“Brazil-Argentina Defense Alliance Could

Hurt US,” ibid., 12 September 2002.

90. John Authers and Sara Silver, “Fox Outlines

Goals for Raising Mexico’s Profile,” Financial

Times, 27–28 May 2003; “Mexico-Brazil

Alignment: Fox’s New Foreign Policy Goal,”

Stratfor.com, 28 May 2003.

91. Kralev, “OAS Balks at Defense Treaty.”

92. Michael Kanell, “Shift to Left Tests US-Latin

Dealings,” Atlanta Journal-Constitution, 21

May 2003.

93. FBIS, “Nineteen Rebel Camps Detected in

Venezuelan Territory,” Agence France Presse

(Paris), 1 May 2003.

94. Andy Webb-Vidal, “Bogotá and Caracas Tensions at Crisis Point,” Financial Times, 23

April 2003; “New Drug Gangs Spreading in

Colombia,” Stratfor.com, 3 April 2002.

95. Robinson, “Terror Close to Home.”

96. Cited in “Ecuador: Economic Challenges for

the Next President,” Stratfor.com, 1 November 2002.

97. Enrique Ghersi, “South America’s New Style

Military Coup,” Christian Science Monitor, 19

spoken Agenda,” Stratfor.com, 22 January

2003.

98. Arie Farnan, “Colombia’s Civil War Drifts

South into Ecuador,” Christian Science Monitor, 11 August 2002.

99. “FARC, Ecuador and Secret Non-aggression

Pacts,” Stratfor.com, 15 May 2003.

100. “Ecuador: Account of Arms Trafficking Rejected,” New York Times, 5 November 2003.

101. “Ecuador Loses More Than $1.2 Billion Annually to Customs Corruption Alone”; “Ecua

dor Studying Militarization of Customs to

Fight Corruption,” ACANEFE (Panama), 23

January 2003.

102. Frances Robles, “Leaders of 15 Latin Countries Meeting in a Troubled Peru,” Miami

Herald, 23 May 2003.

103. “Evo Morales: ‘No Habrá Alianzas’?” BBC

Mundo.com, June 27, 2002; “The Violent Effects of Bolivia’s Coca Eradication Program,”

Stratfor.com, 12 April 2002.

104. Novak, “Cultivating Ferment in Bolivia.”

105. Ricardo Sandoval, “Mexico Touts Its Intelligence Agency,” Dallas Morning News, 22 May

2003.

106. de Oliveira, “New Federal Police Chief Says

Priority Is to Fight Arms Trafficking.”

107. FBIS, Verbitsky, “Argentine Bill to Fight

Terrorism.”

108. FBIS, “Argentine Army Chief Opposes Military Involvement in Domestic Security

Matters.”

109. Larry Rohter, “Latin Lands Don’t Share

Powell’s Priorities,” New York Times, 10 June

2003.

110. “Net Assessment: Latin America—Benign Ne

glect and Persistent Weakness,” Stratfor.com,

16 June 2003.

111. Rubino, “Semana Director on Colombia’s Inability to Resolve Social Crisis.”

112. Center for Strategic and International Studies

(CSIS), “Hemisphere Highlights: Americas

Program,” CSIS.org, 2, no. 6 (June 2003).

113. Rohter, “Latin Lands Don’t Share Powell’s

Priorities.”

114. “Bush Team’s Latin America Agenda Mired i

the Past,” Stratfor.com, 9 September 2002;

Patrick Rucker, “Throughout the Americas,
tian Science Monitor, 12 June 2003.

115. FBIS, “Shining Path Believed to Be Regrouping in Apurimac,” El Correo (Lima), 2

May 2003; “Peruvian Hostage-taking Raises

New Questions about Shining Path,”

Stratfor.com, 10 June 2003; “Raids Indicate

Shining Path’s Resurgence,” Chicago Tribune,

4 July 2003; “World in Brief,” Washington

Post, 10 November 2003.

116. “The FARC, Venezuela and Brazil: Growing

Security Concerns in South America,”

Stratfor.com, 9 April 2003.

117. “New Drug Gangs Spreading in Colombia,”

Stratfor.com, 3 April 2002.

118. Rowan Scarborough, “Drug Money Sustains

Al Qaeda,” Washington Times, 29 December

2003.

Can’t Commit to Eliminating Coca,” 

Herald, 7 April 2002.

120. FBIS, Vladimir Lopez, “Nicaraguan Fo

Ministry Reacts to OAS Report on Div

of Weapons,” El Nuevo Diario (Manag

January 2003; “Nicaraguan Army Gen

Won’t Give up All Missiles,” Arizona D

Star, 5 November 2003.

121. Warren P. Strobel, “Powell Has Advic

Latin Trip,” Philadelphia Inquirer, 5 N

ber 2003.

122. Andres Oppenheimer, “New Latin Am

Poll Spells Trouble for US,” Miami H

November 2003.

123. Jen Ross, “Latin America Eyes Defens

Washington Times, 10 February 2004; 

Verbitsky, “Argentine Bill to Fight

Terrorism.”

Security Implications of Poor Economic

Performance in Latin America

A Framework for Analysis

PAUL D. TAYLOR

In determining the general welfare, conventional wisdom ascribes significant we

economic performance. Most of us believe that if an economy is doing poorly, ba

things will follow. Conversely, it is less likely that a country with a growing and r

ably equitable economy will produce a failed state. When one considers the gene

timism about changes in the Americas a decade ago and the pervasive sense of

disappointment today, one finds two major factors that may explain the shift. Mar

oriented economic models have not registered the important improvements that t

proponents had expected, and democracy has not delivered on its promise of a bet

for most people.

How Is Security Linked to Economic Performance?

This paper focuses on the first point, addressing questions of how poor economi

formance might affect security and the extent to which these consequences are re

in Latin America today. A simple but broad definition of security is posited for t

analysis: reasonable freedom from avoidable internal or external threats to a cou

territory, citizens, institutions, and interests. The word avoidable is intended here 

clude natural disasters.

Different countries have different notions of what degree of freedom from threa

“reasonable.” As Bernard Brodie explained,

Great nations, . . . and especially what we now call the superpowers, will often be concerned w

they deem threats to their security that are often more distant in space, time and even in conc

than simply attack upon their home territories. The main reason, of course, is that the superp

feels itself able to do something effective about a threat that remains as yet indirect or remote, 

not true of a small power except in token association with a large power.1

CHAPTER TWO
example, that “wealth is usually needed to underpin military power and military powe

is usually needed to acquire and protect wealth.”

2

Several methodological difficulties arise when one tries to relate economic phenomena

to their noneconomic consequences. One problem is that the links, even when direct,

are often not strong. Frequently, perceptions of economic difficulties have to build psy

chologically until they reach a critical mass and trigger something else.3

Thus our ability to predict the effects of economic performance is necessarily more limited than we

would like. Moreover, it would be a stretch to ascribe all problems in the security realm

to economic performance. When that performance is poor and creates security problems, security may also be harmed by other factors, such as corruption or generally ineffective governance. When possible, I will try to acknowledge those noneconomic

influences below. Finally, the topic of this paper requires a demonstration that a causal

relationship flows from economic performance to security consequences. Even if this

connection pertains, marshaling the evidence may be problematic. Causes by definition

need to precede their effects, but the nature of economic data is such that they cannot

be measured reliably until some time after the economic performance they are meant

to record, by which time the security consequences might already have been felt.

This paper will seek to relate the recent economic performance of several Latin American countries to its impact on security issues. We will not try here to analyze the causes

of the economic difficulties themselves.

Theoretical Security Consequences of Poor Economic Performance

Conceptually, one could speculate that disappointing economic performance might

impact several factors of security interest:

• Support for democracy could weaken.

• The economic suasions available to criminals and terrorists to undermine security

operations could become more potent as the number of people who may be lured

by drug traffickers and other criminal organizations and guerilla groups increases in

proportion to economic insecurity.

• Militaries and internal security forces could become less capable to address threats

and more susceptible to corruption as their resources become more constrained.

• Migration from poorly performing economies could be stimulated.

• Conversely, the war against terrorism could make it more difficult for migrants to

remit portions of their earnings back to their countries of origin.
growth in trade and investment, thereby reversing the trend toward hemisphe

integration. (Inasmuch as the appeals of economic integration have helped

overcome bilateral tensions, as in the termination by Argentina and Brazil of th

nuclear weapons race as they built the Southern Cone Common Market

[MERCOSUR], abandoning economic integration could give rise to renewed

tensions among countries of the region.)

• To the extent that disappointing economic results in Latin America were perc

as the consequence of indifferent support by the U.S. government or by

international financial institutions, cooperation with the U.S. government on 

across the board, including security, could become more difficult.

With these considerations in mind, the paper will examine the evidence available

Latin America’s Economic Performance

Economic performance encompasses the level of development, the distribution o

come, and the state of macroeconomic achievement. Despite gains in per capita in

over the past several decades (excepting during the debt crisis of the 1980s), the 

development of the Latin American region remains well below that of countries 

Organization for Economic Cooperation and Development (OECD) and a long 

from the level most of its inhabitants would consider satisfactory. Moreover, the 

bution of income compares unfavorably with that of all other major geographic 

gions. Apart from a consideration of income distribution later, this paper will fo

short-term macroeconomic performance and the possible security consequences 

downturns. This focus is premised on the belief that changes in relative perform

are likely to have the most disruptive effects on security.

Regrettably, poor macroeconomic performance in Latin America has been unmi

ably clear. Take the cases of the seven largest national economies of Latin Americ

the Caribbean, countries that account for more than 80 percent of the total popu

and about 90 percent of the total economic activity of the region. They are Argen

Brazil, Chile, Colombia, Mexico, Peru, and Venezuela; their economic performan

summarized in table 1. Together they illustrate a pattern of economic performan

the year 2002 that ranged from disastrous, in the cases of Argentina and Venezue

lackluster in the other countries except Peru. The effects of weak growth carried 

pointing consequences for employment in most countries in the region. High ra

inflation further explained particular discontent in Argentina and Venezuela. Go

ments’ efforts to address their countries’ economic difficulties created additional 

lems. For example, many Argentines saw the sharp devaluation of the Argentine 
state to play by the rules of the game and respect constitutional guarantees.4

Flows of foreign direct investment (FDI) to Latin America and the Caribbean plunged

by one-third in 2002, to $56.7 billion from $84 billion in 2001. This decline compared

with a drop of 12.6 percent in 2000, and another 11 percent in 2001.5

The drop in FDI

was a response to slower economic growth in the region and, in turn, exacerbated that

trend by reducing the prospects for an early recovery.

This disappointing short-term performance early in the first decade of the twenty-first

century occurred in the context of an already-disconcerting level of economic insecurity in Latin America and the Caribbean. Dani Rodrik, in a paper published in 1999,

cited surveys undertaken in the region:

A large cross-national survey of 14 Latin American countries recently found that 61 percent of the respondents thought that their parents had lived better than they do. Moreover, less than half of the respondents (46 percent) thought that their children would end up having better lives than themselves,

with that percentage varying from as little as 30 percent in Mexico to 61 percent in Chile.

The same survey identified a strong demand for social insurance in the region. Almost three-quarters

of the respondents favored increased spending on unemployment insurance, and more than 80 percent expressed a desire for more spending on pensions.6

Latin America Compared with the World

A major contributor to poor economic performance in Latin America was the desultory pace of economic activity in the major world economies. Growth in GDP in the

OECD region, estimated at only 2.6 percent in 2002, ended on a gloomy note, with

growth in the fourth quarter turning down to 0.4 percent compared with 0.8 percent in

the third quarter.

7

With about half of Latin America’s total exports going to the United

States and accounting for some $200 billion annually in foreign exchange earnings for

the region, the importance of the rate of U.S. growth is evident. The U.S. economy

GDP POPULATION CONSUMER PRICES

VALUE OF

CURRENCY

Argentina -5.2 +1.30 +41.0 -70.3

Brazil +3.4 +1.21 +12.5 -35.0

Chile +3.2 +1.26 +2.8 -9.2

Colombia +2.0 +1.89 +7.0 -20.1

Mexico +2.3 +1.77 +5.7 -12.1

Peru +5.2 +1.97 +1.5 -1.7

Venezuela -16.7 +1.75 +31.2 -45.3

TABLE 1

Economic Performance

Percent Changes during 2002

Sources: GDP: The Economist, March 29, 2003, and May 24, 2003. Population: data for 1999, Bureau for Latin America

and the Caribbean, U.S. Agency for International Development, 2000 Latin America and Caribbean Selected Economic

and Social Data. Consumer Prices: The Economist, January 25, 2003. Currency: The Economist, January 4, 2003.
the European Union and Japan continued to lag.

As early as 6 September 2003 one important manifestation of these trends could 

seen in the downturn in FDI; on that date The Economist reported that after imp

growth year after year from 1991 to 2000, the level of FDI dropped in 2001 and a

in 2002, reaching only about $650 billion in 2002, compared with more than $1.

lion in the year 2000. Annual declines of 71 percent in North America and 41 pe

in Africa greatly surpassed the drop of 33 percent from 2001 to 2002 registered i

America and the Caribbean.

Latin American presidents and finance ministers could take comfort in the realiz

that economic performance in some other parts of the world was even worse tha

their countries, and also in the understanding that some of their countries’ prob

were a result of forces beyond their control. Most of their citizens, though, were 

likely to measure their own economic well-being against what it used to be or ag

what they expected it to be than to compare it to that of another place. It is not e

most people to weigh their current economic situation against that of an abstrac

son in another country.

Support for Democracy

We start with a question: does poor economic performance undermine support 

democracy?

One may also wonder why democracy is a security issue. One simple answer is tha

United States has chosen to make it so by stressing in Latin America a policy agend

predicated on four complementary goals:

• The promotion of democracy

• The encouragement of responsible government

• The strengthening of security

• The stimulation of economic development.

Paula J. Dobriansky, undersecretary of state for global affairs, stressed before the 

ciation of American Chambers of Commerce in Latin America that “these goals 

late to and reinforce one another.” She added, “The foundation of prosperity and

stability is a democratic system of government.”

8

This conviction is widely shared by other governments of the Western Hemisphe

The Inter-American Democratic Charter adopted by members of the Organizati

American States (OAS) in September 2001 represented a consensus among all m
Not coincidentally, this formulation echoed the language that the Rio Treaty applied to

threats against the territory of a member state.

The history of the last two decades in Latin America has been one of political transformation from authoritarian regimes in most countries to democratically elected govern

ments, and of economic transformation from statist, inward-looking economies to

more open, market-oriented economies following the neoliberal model of the Washington Consensus.9

It would not be surprising if citizens, unhappy that they have not

felt a marked improvement in their sense of well-being, found it difficult to determine

whether it was the economic or the political reforms that had failed them.

The available evidence suggests that while Latin American economies languished, most

Latin American citizens became less supportive of democracy from 2002 to 2003. This

was the conclusion of opinion polls conducted by Latinobarometro.

10 Support for democracy continued to decline from 1997 levels after an uptick in 2002.

Secretary of State Colin L. Powell recognized before the OAS that, “Our citizens

know that free and fair elections alone do not guarantee effective, accountable government. . . . New democracies created with high hopes can founder if the lives of

ordinary citizens do not change for the better.”

11 In the language of the 2003 Policy

Report of the Inter-American Dialogue, “Democracy in Latin America is unlikely to

thrive while economic growth is anemic, unemployment is at record levels, poverty

and steep inequality are pervasive, and most people believe their lives will be worse

than those of their parents.”

12

A logical question in this regard is why the region has not seen a resurgence in recent

years of the coups that led to a preponderance of military governments in Latin America during the 1960s and 1970s. One may find an explanation in the changed external

environment, evolution in the aspirations of military leaders in the region, and democratic maturation on the part of Latin American publics.

The collapse of the Soviet Union greatly altered the context in which both Washington

and Latin American governments operate. When the Cold War was raging and a robus

Soviet/Cuban apparatus was poised to exploit opportunities to expand its influence in

the Western Hemisphere, successive U.S. governments and Latin American militaries

easily achieved consensus on the need to unite against a shared security threat. When

the question came down to a choice between protecting democracy or countering a

threat to security, security considerations usually trumped. The tide began to turn dur

ing the 1980s, when democracy came to be perceived more as a bulwark against Soviet

influence than as a rival of security. For the United States, the centerpiece of this policy
40

30 40 50 60 70 80 90 100

45

50

55

60

65

1996

1996

Paraguay

Peru

Mexico

Ecuador

Bolivia

Brazil

Argentina

Chile

Venezuela

Uruguay

Colombia

Central America

2002 2003

97 98 99 2000 01 02 03

Democracy is preferable to any other kind of

government, % agreeing

How satisfied are you with the way democracy

works in your country? % responding “not very

satisfied” and “not at all satisfied”

Unweighted

Weighted*

*By 2003 population No data

†

†

Latin American Opinions of Democracy

Sources: Latinobarómetro; EIU. The Economist, 1 November 2003. By permission.
gency supported by an authoritarian Nicaraguan regime allied with Cuba and the Soviet Union. This emphasis was complemented by a push in U.S. policy against the

dictatorships in Chile and Paraguay and support for transitions to democracy elsewhere in the hemisphere.

Simultaneously, the Latin American debt crisis and the severe economic contraction

that was forced on most countries in the region provided a powerful incentive for thos

military officers who had assumed political power to return to their barracks. It was with

some sense of relief that, between 1981 and 1991, they handed the reins of government

over to elected civilians in all of the countries of South and Central America, except

Colombia, Costa Rica, Ecuador, and Venezuela, which already had elected government

at the beginning of the period. While they may have had reasons to want to hang on to

political power, military officers found little joy in exercising responsibility after the

debt crisis had denied their countries access to the financing traditionally available

from international lenders. For their part, Latin American publics were happy to be rid

of people and policies that had failed to deliver acceptable economic results. The new

governments were fragile, to say the least, in most countries, so they welcomed interna

tional support for democracy. This support built steadily on a bilateral basis throughout

the late 1980s and 1990s until it was formally embodied multilaterally in the InterAmerican Democratic Charter, adopted on 11 September 2001.

Latin American publics themselves also underwent an impressive democratic maturation. The severe economic crises of recent years in Argentina and Venezuela have not

prompted widespread calls for military government. The number of those positively

answering a question from pollsters of whether “democracy is preferable to any other

kind of government” did drop somewhat—from 71 percent to 65 percent—in Argentina from 1996 to 2002 but recovered to 68 percent in 2003, probably reflecting both

the beginning of a recovery from the economic collapse of 2001 and the popularity of

the new president, Néstor Kirchner. In Venezuela, pro-democratic responses actually increased from 62 to 75 percent by 2002 before dropping to 67 percent in 2003.13This senti

ment could be seen in the reversal of the attempt to oust President Chávez in 2002.

Instead of jettisoning the democratic form of government, voters in several countries

demonstrated a sophisticated ability to place blame on the policies, and sometimes the

persons, they held responsible for disappointing performance. Clearly a common denominator in the elections of Hugo Chávez in Venezuela, Luiz Inácio Lula da Silva in

Brazil, Lucio Gutiérrez in Ecuador, and Néstor Kirchner in Argentina was dissatisfaction with their countries’ economic performance. In the cases of Chávez and Gutiérrez

corruption in the governments they replaced was also an important factor. It is hard to
tion in motivating their votes, but the voters have largely chosen to focus on pers

ties and policies rather than to turn, as in the past, to the military institution for

political salvation. Part of the appeal of Chávez and Gutiérrez surely stemmed fr

their images as strong individuals who had come to prominence as army officers 

coup attempts. Describing Gutiérrez, Andrés Benavente Urbina wrote, “Emulatin

Chávez, he presented himself dressed in a green military jacket that evoked his m

past and symbolized an authoritarian image for his eventual performance as pol

leader.”

14 Nevertheless, Chávez and Gutiérrez derived their presidential power fro

ballot box rather than from a tank turret.

Proponents of democracy can be heartened, instead of discouraged, by electoral pr

cesses that change the course of public policy. The ability to alter policy is a prereq

for political accountability and a hopeful sign of political maturation in the hemisp

The widening realization that a leader can favor shifting the rewards of public poli

less advantaged segments of society without having the process exploited from abr

but the latest benefit of the end of the Cold War. From the perspective of the Unite

States, favoring democratic and reformist government is far less likely to conflict w

security objective than it might have been a generation ago.

If Chávez, da Silva, Gutiérrez, and Kirchner got elected in part because their prom

effect some shift in economic policy was seen as an antidote to disappointments 

ated with the neoliberal model, the pressure will be on them to succeed with new 

nomic policies. So far, their commitment to new policies has gone largely unreal

The economic mandates of da Silva and Gutiérrez were somewhat blurred by the

brace late in their presidential campaigns of such tenets of the Washington Cons

as cooperation with foreign lenders and receptivity to foreign investment. Cháve

made less headway in reforming Venezuela’s economic structure than he has in i

menting his own brand of political reform.

Nevertheless, if these leaders cannot deliver a better standard of living to their po

tions, interest in nondemocratic approaches to governance could be fueled. In ot

words, democratic elections have enabled a potentially important policy shift; bu

jury is still out on whether the new leaders’ policies will be significantly different

whether continued economic failure might raise doubts about the democratic m

itself after alternative policy agendas have been tried. So far both da Silva and Gu

have decided to work with international financiers, both official and commercial 

ers. If their approach bears fruit, it may contribute to a strengthening of support 

democracy. If not, their departure from the more statist platforms on which they 

elected could cause some supporters to conclude that democracy itself had failed 
American countries, but not all. The cases of Venezuela and Argentina, with serious eco

nomic difficulties in 2001 and 2002, suggest that the correlation may sometimes even be

inverse. While there has been a general weakening of public support for democracy

throughout Latin America during the past half decade, economic performance during

that period has been mixed. Concern over problems of governance, such as corruption

and other crime, may have been important factors in shaping public perceptions of

democracy.

Internal Security

One could expect poor economic performance to worsen internal security in at least two

ways. Economic hardship could cause some people to turn to crime as a means of

support while making others more vulnerable to subornation by well-financed drug

dealers or terrorists. At the same time, economic difficulties might strain government

budgets and reduce the resources available for security forces.

Colombia

The government of Colombia incurs costs on several fronts as it addresses the longestlasting and most violent security challenge in the hemisphere—that is, the sustained

campaign by allied narcotics and terrorist enterprises. The government recognizes, in

the language of Richard Millet, that while “there is no military solution to the Colombian crisis, it is also true that there is no solution without a meaningful military component.”

15 Seeking improved security as his top priority, President Alvaro Uribe plans

to raise defense spending (including that for police and pensions) from 3.5 percent of

GDP to 5.8 percent by the end of his term in 2006.16 His government knows that success in the war depends also on giving rural populations hope for the future and alternatives to employment in cultivating and processing narcotics. Rural development is

expensive, but experts in counterinsurgency see it as a requirement for winning the

hearts and minds of rural populations.17 One indicator of the enormity of this task is

the daunting challenge of providing livelihoods for the estimated six hundred thousand Colombians employed in the drug trade if Plan Colombia succeeds in destroying

the narcotics industry.

The attacks by terrorists on major pipelines and petroleum processing facilities have

complicated the challenge for the government to meet a commitment under Plan Colombia to provide five billion dollars as its share of the program.18 The immediately ad

verse impact of these attacks on the Colombian economy is exacerbated by their

longer-term impact in discouraging foreign investment in the country. The two-way

relationship between security and economic performance is clear in the Colombian
that are essential to address the security threat; the most serious impediment to s

ger investment and more robust growth is investors’ lack of confidence in the sec

situation. The U.S. Andean Counterdrug Initiative attempts to help Colombia br

out of this vicious economic-security cycle by providing $731 million for “social 

economic development as well as for counternarcotics and security efforts.”

19

The case of Colombia demonstrates that an economy can be both a target of terr

and an essential element in their defeat; major security and developmental expen

tures may have to be funded, either from domestic sources or foreign assistance.

Argentina

The Argentine case is more clearly one in which serious economic problems dev

and predated other important domestic political and social problems. When Pre

Adolfo Rodriguez Saa declared a moratorium on his country’s $155 billion publi

on 23 December 2001, he did far more than effect the largest such default by any 

try in history.

20 One of the first consequences was his own prompt resignation. W

a year, 60 percent of the country’s thirty-seven million people—double the num

the end of 2001—had slipped below the poverty level, defined as an income of le

than $220 a month for a family of four.

21 Many Argentines, facing freezes on thei

ings accounts, tight controls on foreign exchange transactions, shortages of impo

goods ranging from Chilean salmon to critical medicines, sharply inflated prices

unemployment, took to the streets to attack banks and politicians. Crime soared

the rate of Argentine deaths attributed to criminal violence surpassed the level in 

torn Colombia.22 Increasing needs for help with social problems were met by a d

in social services caused by the budgetary crisis that the economic collapse had

triggered.

Some two and a half years after the economic crisis had come to a head, there we

dications that an end was in sight. A new president, Néstor Kirchner, took office 

May 2003. Although the strength of his mandate was limited by the decision of f

president Carlos Menem to withdraw from a runoff election, and even though Kir

previous experience in government was limited to provincial politics, the Argentin

lic seemed hopeful that he could succeed. This sentiment could become a self-ful

prophecy. In June 2003, Kirchner’s government reached a long-delayed accord 

the International Monetary Fund to begin negotiations on a multiyear agreemen

promised essential relief.
Brazil offers a different case. Luis Bitencourt, in his study, conducted for the Americas

Program of the Center for Strategic and International Studies (CSIS), on Brazil’s grow

ing urban insecurity, notes that during the last ten years crime statistics for cities such

as Rio de Janeiro, São Paolo, Espírito Santo, and Recife have skyrocketed.23 He asserts

that the populations of these cities are frightened and skeptical about the state’s ability

to protect them, and he judges that “the situation is so grave that in some urban regions

criminal gangs command more obedience than the authority of the state.” Bitencourt

documents a doubling in the murder rate per capita between 1979 and 1997.

Bitencourt includes among the causes of the deterioration of urban public safety “poverty, and especially the huge gap existing between the rich and the poor [which] create

a fertile environment where drug dealers circulate and establish areas of influence.”

24

For Bitencourt, however, the economic aspect is but one of many factors causing security to deteriorate. Inefficiencies in law enforcement and the judicial system, gaps and

overlaps in the federal system, and failures in intelligence all contribute.

The problem of deteriorating urban public safety has been getting worse for years, in

good economic times and bad. While economic difficulties may have contributed to

this trend, it is equally clear that other factors were at play that could by themselves

have explained the decline in urban security.

Venezuela

The Venezuelan situation has elements of economic distress and violence. The relation

ship between them may be unique. As noted above, Venezuela’s GDP fell more than 16

percent in 2002, and unemployment approached 20 percent, with thousands of businesses closing and capital flight amounting to billions of dollars.25 More than elsewhere

in the region, Venezuela became polarized politically, with the government blaming the

poor economy on, first, decades of official neglect of the poor and, recently, a series of

prolonged national strikes organized by the political opposition to try to cripple and

eventually topple the government. The opposition blamed the poor economy on governmental mismanagement.

President Chávez’s creation of Bolivarian Circles—loosely organized groups of his most

ardent followers—deepened the polarization and contributed to violence and a pattern

of intimidation of opponents to the government. Although definitive information was

elusive about the numbers of adherents, their training, and the extent to which they ar

armed, the Bolivarian Circles and the reaction they have induced have undoubtedly

been responsible for increased unrest.26
under the Chávez government as a principal grievance, and some may have been 

to civic violence by economic factors alone. A more compelling explanation of v

lence, though, was the sense in both the government and its opposition that the 

side lacked legitimacy and was intent on effecting changes that would deny citize

their basic rights. The opposition complained that Chávez was antidemocratic, g

erned in a chaotic and confrontational way, and was too influenced by Fidel Cast

The government and its supporters argued that previous governments and the tr

tional Venezuelan establishment had been blithely indifferent to the needs of the 

Nearly 40 percent of the population remained loyal to the government even as p

tioners demanded a recall vote.28 Under these circumstances, both sides resorted 

lence to further their political agendas, in which economic issues were but one fa

Bolivia

Recent events in Bolivia bear mention even though Bolivia is not among the seve

est economies on which this paper is primarily focused. These events demonstra

nections among economic performance, crime, and political instability. Bolivia s

from the lowest per capita income among the countries of South America, one o

least equitable distributions of income in Latin America, and a pattern of growth 

has stalled for the past five years.

This situation provided an ideal setting for the cultivation of illicit narcotics and 

political mobilization at which Evo Morales has been so successful. As a leader o

coca growers’ federation and a member of Congress, Morales has been able to fo

links among the economically disadvantaged, indigenous citizens who feel aggrie

the pattern of Caucasian domination of Bolivia’s political life, and those who bel

that the benefits of international transactions usually accrue to foreigners or to a 

privileged Bolivians. Marta Lagos, a Chilean political analyst whose firm, Latinobarómetro, has done surveys of public opinion in Bolivia, observed that “Bolivia

suspicious of whoever is making the deal because they think, ‘The elite always pu

money in its own pockets, and we are left on the streets with nothing to eat.’” 29

Morales came within two percentage points of defeating Gonzalo Sánchez de Lo

the 2002 presidential election. With just over 22 percent of the vote, Sánchez won 

cision in Congress that paved the way for a second presidential term, which he co

menced amidst widespread resentment over his government’s embrace of econom

policies urged on it by the United States, the World Bank, and the Internationa

etary Fund. With jobs scarce in Bolivia, emigration to neighboring Argentina a

Chile accelerated over the past decade.30 Sánchez pursued a U.S.-backed campa

eradicate coca production without obtaining adequate funding to couple it wit
bananas, coffee, black pepper, oregano, and passion fruit on land once devoted to coca.31

This confluence of forces provided the context in which the government’s proposal to

export natural gas to Mexico and the United States via a port in Chile—Bolivia’s longstanding enemy—was received. Eduardo Gamarra, a Bolivian scholar who directs the

Center for Latin American and Caribbean Studies at Florida International University,

commented that “Evo Morales and others have shrewdly used [the Free Trade Area of the

Americas or the gas export law] as a flag which plays on [people’s] deepest fears, the loss

of identity and the giving away of what they consider to be their national patrimony.”

32

Well-organized protests aimed immediately at the proposal to export natural gas resulted in the deaths of more than eighty protesters and led to the resignation of President Sánchez de Losada on 17 October 2003. Poverty was a reason farmers were

attracted to coca cultivation, and economic constraints had made the government’s

program for its eradication less likely to succeed. The strong sense of economic injustice that Evo Morales and others were able to exploit in racial terms added weight to

the argument that governmental policy lacked legitimacy because it corruptly benefited

ethnic and economic elites.

Privatization and Corruption

Other examples of economic phenomena creating public disorder were provided when

violent protests in mid-2002 caused both Peru and Paraguay to abandon plans to privatize public firms. In Peru, protestors expressed fear that privatization would create

unjustified windfalls for the politically well connected as well as higher utility tariffs

and job losses.33 For many citizens, corruption in public life and their own unsatisfactory economic plight are two sides of the same coin.

Public intolerance for further sacrifice and a lack of faith in economic reforms, absent

a perceptible shift in the distribution of political power, serve as serious constraints on

the ability of many governments to carry out the secondary reforms needed to consolidate effective democratic governance—reforms such as improving systems of taxation

and administration of justice. A recent Latin American poll cited by the Inter-American

Development Bank (IDB) noted that 63 percent of the respondents thought the result of

privatization of state enterprises was negative. One of the report’s authors, Eduardo Lora

principal economist of the research department of the IDB, commented, “What makes

Latin Americans frustrated are not the privatizations themselves but the corruption

that surrounds them.”

34
nies was outweighed by opposition to privatization and had dropped significantl

1998 to 2003.

Fourteen out of twenty-one Latin American and Caribbean countries included i

latest Corruption Perceptions Index, prepared by Transparency International fro

multiple sources, fall into the more corrupt half of the 102 countries covered. On

Chile (in seventeenth place) and Uruguay (in thirty-second) qualify for the top t

that is, among the least corrupt countries. Seven Latin American countries are am

the worst 20 percent surveyed.35 The pervasive corruption in most countries of th

gion has negative consequences for both democracy and development. As it weak

faith in the legitimacy and equity of government, corruption also dampens inves

by firms and individuals who have a range of choices when deciding where to pla

their resources.36 Furthermore, corruption is facilitated when crime is high and g

mental resources are sparse, providing havens for illegal criminal and nonstate a

who threaten U.S. interests.

Migratory Pressures and Remittances

Most contemporary immigration is economically driven, a consequence of differ

in employment opportunities between sending and receiving countries.37 In the W

ern Hemisphere, some of the migration from Cuba and Colombia is also motiva

political and security factors. Because economic differentials are the principal dr

migration in the Americas, one would expect poor economic performance in the 

term to spur migration. Regrettably, the data are not available to permit an exam

tion of whether the recent downturn stimulated an increase in migratory flows. T

question merits further research.

Several security implications of known migratory patterns are worth noting. Twe

million people of Latin American and Caribbean origin live outside their own co

tries. Seven out of ten of these reside in the United States, legally or otherwise.38 

from Latin America and the Caribbean make up 52.2 percent of the foreign-born 

ulation in the United States, and two-thirds of these come from Mexico and Centr

America.39 Interestingly in terms of the present analysis, recent migration within L

America has fallen; this decline is associated in part with the reduction in opportu

for employment in the main traditional destination countries, Argentina and Vene

Most immigrants from Latin America to the United States are men with low-leve

but average educational levels higher than those of their countries of origin.41 Am

immigrants from South America and the Caribbean, however, people with medi

high-level skills are the most common. In fact, economic troubles in Argentina c
labor shortages in the recipient countries but constitute a loss of human capital for

their countries of origin. The drain of educated citizens can contribute to deterioration

in a sending country’s capacity to produce goods and services, with negative repercussions for terms of trade, productivity, and competitiveness.43 Migration may, though,

provide a political benefit to sending countries, as it creates an escape valve for the discontent of unemployed or underemployed people. Recent flows of migrants from economically stressed countries of Latin America have not produced serious frictions with

native populations in receiving countries.

A potentially serious security problem for recipient countries may stem from undocumented immigration. Using a combination of demographic and statistical procedures,

the Economic Commission for Latin America and the Caribbean estimated that in

1996 there were some five million undocumented immigrants in the United States.

Most of these had entered “without inspection”; the remainder had overstayed their vi

sas.44 Together they demonstrated the porosity of the U.S. border, the existence of wide

spread and effective “coyote” networks that facilitate illegal immigration, and the

inability of authorities to identify and expel undocumented immigrants. These realitie

offer opportunities to international terrorist networks interested in inserting operative

into the United States to attack targets there.

Heightened concern about this possibility after 11 September 2001 dashed Mexican president

Vicente Fox’s hopes for major immigration reform and dampened U.S.-Mexican goodwill for

more than two years. The initiatives on immigration that President George W. Bush proposed

early in 2004 represented a thaw that could, if implemented, alter U.S.-Mexican relations.

It remains to be seen whether the increasing awareness of the links between immigration and security will lead to a willingness to take stronger measures to force employer

to check workers’ credentials.45 Though most employers who depend on illegal immigrants do not like to talk about it, their eagerness to employ such workers is a reality.

The International Organization for Migration observed that “among advanced industrialized countries, the United States has the toughest penalties for immigrant smuggling

and related activities, yet is amongst the lowest in terms of penalties against employers.”

46

The influence of employers competes politically with the concerns of citizens who may

feel uncomfortable about the presence of millions of undocumented foreigners.

Meanwhile, immigrants from Latin America, documented or not, have contributed

mightily to better the economic situations in their home countries by remitting an esti

mated $25 billion a year (in the year 2002), an amount well in excess of total official

development assistance to those countries and, for many of the smaller economies,

equivalent to a significant share of their export earnings.47
These remittances move with little interference from U.S. authorities, who are an

to retain the unfettered pattern of capital flows into and out of U.S. markets. Thi

treatment could have been altered by increased concern about security considera

in the war on terrorism. There was a possibility that controls would be imposed 

mittances to deny financing of international terrorist groups from the United Sta

This possibility has been reduced, however, by authorities’ success in imposing se

controls to keep funds from flowing to narco-terrorist groups in Colombia or to 

groups, operating in the Triple Frontier region of Argentina, Brazil, and Paragua

channeled charitable contributions to terrorist causes.

Recent migration from countries in economic distress removed a potential sourc

political disruption without creating unmanageable disruption in receiving coun

which often benefited from the infusion of labor. These results of migration enh

overall security. Remittances by migrants have had a significant positive econom

pact on their countries of origin, but the benefits have been very unevenly distrib

among the countries of Latin America and the Caribbean.

MILLIONS OF

DOLLARS

AVERAGE

ANNUAL

VARIATION % OF GDP % OF EXPORTS

1990 2000 1990–2000

(%)

1990 2000 1990 2000

Latin America and

the Caribbean

4,766 17,334 13.8 0.4 0.9 2.7 4.2

Mexico 2,492 6,573 10.2 0.9 1.1 5.1 3.6

El Salvador 357 1,751 17.2 7.9 13.6 36.7 47.8

Dominican Republic 315 1,689 18.3 4.5 8.5 17.2 18.8

Colombia 488 1,118 8.6 1.2 1.3 5.6 7.2

Brazil 527 1,113 7.8 0.1 0.2 1.5 1.7

Ecuador 50 1,084a

36.0 0.5 8.0 1.5 18.7

Jamaica 136 789 19.2 3.2 10.8 6.1 23.3

Cuba — 720 — — 2.5 — 15.0

Peru 87 718 23.5 0.2 1.3 2.1 8.4

Guatemala 107 563 18.1 1.4 3.0 6.8 14.9

Honduras 50 410 23.4 1.6 6.9 4.8 16.3

Nicaragua 10c

320 41.4 0.9 13.4 2.6 34.0

Other 147 487 12.7 0.1 0.1 0.2 0.4

Latin America and the Caribbean: Main Countries Receiving Remittances

1990 and 2000

Notes:

a. Figure for 1999.

b. Figure for 1998.

c. Figure for 1992.

Sources: ECLAC, on the basis of figures from the International Monetary Fund (IMF), Balance of Payments Statistics. 2001 Y

book, Washington, D.C., 2001; Cuba: estimates by the country. Cited in ECLAC, Globalization and Development, p. 247. 

the inflows or remittances by the country in question are taken into account.
As the biggest economic player in the Western Hemisphere, the largest trading partner,

and a major actor in international financial institutions, the United States is the country to which many Latin Americans look when they seek someone to blame for their

troubles. Sometimes Washington makes it easy to fault the U.S. government, as when

former treasury secretary Paul O’Neill articulated a prescription of “tough love” for Ar

gentina so bluntly that he seemed almost to revel in it. When Washington underscores

its words with unfriendly actions, such as imposing supplemental tariffs on steel goods

or a farm bill laced with domestic supports and export subsidies that have the effect of

depressing the incomes of farmers in Latin America, it invites criticism from its

neighbors.

Obviously, the positions of Chile and Mexico on a resolution in the United Nations Security Council to authorize the use of force in Iraq—a major U.S. security priority—

were viewed as unhelpful by the United States. They may have been popular at home

because of a perception of U.S. indifference to Latin American problems. Ironically, the

discord emerged just after Chile had negotiated a free trade agreement with the United

States and at a time when Mexico had the closest economic relations with the United

States of any Latin American country. A consequence of close trading relations is trade

disputes, as the United States has experienced with Canada and the European Union.

In fact, the difficulties of Mexican farmers in adjusting to the phase-in of liberalized

treatment for agricultural goods under the North American Free Trade Agreement may

have strained relations just as the UN vote was being considered. President Fox’s disappointment over the failure to win a liberalization of U.S. immigration practices was an

other factor.

Latin Americans’ perceptions of the United States have been turning more negative.

According to polling by Latinobarómetro, in 2000, 67 percent of respondents in Mexico and South America held a “good” or “very good” opinion of the United States. By

2003, those responses had fallen to 53 percent, while 39 percent admitted to a “bad” or

“very bad” opinion, up from 18 percent in 2000.48

The enthusiastically cordial reception Fidel Castro received when he visited Buenos Aires in May 2003 may have related to his image of defiance of the United States, capitalism, and the international financial status quo. That event by itself lacked real security

significance, but it contributed to worsening the context in which governments have to

decide important things.

The eagerness of the United States to back assistance to Brazil and Uruguay in August

2002 stood in contrast to its prior stance vis-à-vis Argentina. The situations were different with respect to some elements of economic policy; and Brazil’s economy was
much larger than Argentina’s, so the potential of its collapse was far more threat

to the international financial system. Nevertheless, the strong support Washingto

vided for the International Monetary Fund’s $30 billion rescue package can be se

part as an admission that the U.S. posture on Argentina’s financial plight had bee

strident. Further interaction with the government of Luiz Inácio Lula da Silva, es

cially Washington’s unwavering determination to accent the positive and ignore p

sophical differences, indicates that it may have taken to heart charges that its critic

Hugo Chávez and open support of his opponents contributed to a perception that 

United States was not foursquare in favor of democratic governance in the Americ

Substantive economic relations between the United States and Latin American ec

mies actually served to ameliorate the economic downturn in Latin America. Pat

of trade between the United States and Latin America adjusted to the slowdown 

growth in Latin America and generally stronger rates of economic activity in the

40 20 0 + - 20 40 60 80 100

2000

Paraguay

Peru

Mexico

Ecuador

Bolivia

Brazil

Argentina

Chile

Venezuela

Uruguay

Colombia

Central America

2002 2003

What is your opinion of the United States? net*, %

*”Very good” and “good” minus “bad” and “very bad”

Latin American Opinions of the United States

Source: The Economist, 1 November 2003. By permission.
clined from a record $171 billion to $149 billion in 2002, while imports dropped only

$5 billion—from $209 billion to $204 billion. The result was a significant increase in

the U.S. trade deficit with the region, which had grown from $5 billion in 1997 to $39

billion in 2000, and to $55 billion in 2002.

As by far the largest foreign market for Latin American producers, the U.S. economy

offset some of the downturn that otherwise would have created even greater levels of

unemployed capacity in their home markets. The commercial relationships among literally millions of traders throughout the hemisphere strengthened nongovernmental

bonds that continued to draw the United States and its neighbors closer. In contrast,

though, to foreign direct investment, which had been in decline since 2000, nearly all

of the trade decisions took place exclusively in the private sector, without any explicit

governmental involvement. While FDI decisions are often private, sometimes major

decisions on where to build a new factory or whether to buy a foreign company become the objects of high-level attention in the governments of the parties to a potentia

transaction. In these cases, governments’ eagerness to have their firms succeed may

make them more cooperative in other aspects of foreign relations.

In contrast to the days when dependency theory dominated intellectual appreciations

of international economic relations and many countries of Latin America were

0

50,000

100,000

150,000

-100,000

-50,000

200,000

250,000

0

1997 1998 1999 2000 2001 2002

U.S. Exports U.S. Imports Trade Balance

FIGURE 3

U.S. Trade with Latin America

Source: U.S. Census Bureau, U.S. Trade Balance with Latin America (Excluding Mexico) and Trade Balance with Mexico, available a

www.census.gov/foreign-trade/balance/c2010.html.
United States may be mild. Whatever the U.S. stance on economic issues, though

perception that the war on terrorism has diverted the attention of the United Sta

other regions may make it harder for Washington to win support on its security

agenda, especially when the threat to countries in Latin America is seen as weak, 

the case of Iraq. Just as in NATO Europe, achieving a shared perception of a thre

necessary to convincing other countries to accept any sacrifice to meet it.

Will Latin America’s Economic Performance Ever Be Satisfactory? The Challenge 

come Distribution

Latin America and the Caribbean hold the dubious honor of possessing the least 

table distribution of income of any region in the world. The Inter-American Dev

ment Bank described the situation in the region this way:

A quarter of all national income is received by a mere 5 percent of the population, and the top 

cent receive 40 percent. Such proportions are comparable only to those found in some individ

rican countries, whose per capita income levels are half those of Latin America, and they are

considerably higher than those of any other group of countries. In Southeast Asian countries, 

wealthiest 5 percent receive 16 percent of all national income on average, while in the develop

countries they receive 13 percent.

The counterpoint to the great concentration of income in the hands of wealthy Latin America

found at the other end of the income scale in Latin America: the poorest 30 percent of the pop

receive only 7.5 percent of total income, less than any [other region of] the world.50

Several implications for security flow from this distribution of income. First, the

an inverse association between concentration of income and acceptance of demo

There is also a strong relationship between the distribution of income and rates 

erty. Additionally, poor distribution of income fuels migration. Finally, income i

equality, as well as poor economic performance, has an impact on crime rates.

Public opinion polling shows a clear relationship between a country’s income dis

tion and the degree of support for democracy there (see figure 4).51Where incom

equality is less pronounced, as in Uruguay or Costa Rica, a high proportion of th

population believes that “democracy is preferable to any other kind of governme

the more unequal countries, there is a greater tendency to accept authoritarian g

ments and more people think that “it makes no difference whether a regime is d

cratic or nondemocratic.”

52

More than a third of Latin Americans live at the poverty level, under two dollars 

day—the minimum considered necessary to cover basic consumption needs. In i

port on inequality, the Inter-American Development Bank calculated that if Lati

American countries had the income distribution typically found in other countr

similar level of development, the incidence of poverty would be half what it actu
is.53 Considering that migration is driven by relative differences in income between

sending countries and receiving countries and crime is associated with poverty, then

the inequitable distribution of income prevalent in Latin America contributes to both

migration and crime by increasing the number of people living at the low end of the

income distribution.

From their extensive econometric analysis of the relationship between inequality and

violent crime, Pablo Fajnzylber, Daniel Lederman, and Norman Loayza concluded that

an increase in income inequality has a significant and robust effect of raising crime rates. In addition,

the GDP growth rate has a significant crime-reducing impact. Since the rate of growth and distribution of income jointly determine the rate of poverty reduction, the two aforementioned results imply

that the rate of poverty alleviation has a crime-reducing effect.54

Their results underscore the security relevance of the main focus of this paper, shortterm economic performance, as well as the longer-term security consequences of patterns

of income distribution.

% that prefers democracy

Gini coefficient of income†

90

80

70

60

50

40

0.40 0.45 0.50 0.55 0.60

Uruguay* Costa Rica

Argentina*

El Salvador

Venezuela

Peru

Bolivia*

Honduras

Panama

Chile

Mexico Brazil

Guatemala

Paraguay

Ecuador

Income Concentration and Acceptance of Democracy

Source: Latinobarómetro and IDB calculations based on recent household surveys.

* Countries with urban data only.

† The Gini coefficient indicates the relative distribution of income. A Gini coefficient of 0.0 would correspond to an equal distributio

of income among everyone in a country. One of 1.0 would result if all the income in a country were held by one person. Actual distr

butions range from between 0.25 and 0.3 in Spain and Finland and 0.6 in some countries of Latin America. Reproduced by permissio

of the Inter-American Development Bank. See Inter-American Development Bank, Facing Up to Inequality in Latin America, p. 11.
stubborn resistance in the U.S. economy to several efforts to reduce disparities in 

tribution, starting with the New Deal in the 1930s and continuing in the program

the Great Society of the 1960s and since. Efforts in Latin America to use the tax s

to redistribute income have frequently done more to demonstrate the weakness o

ernmental authority and the political power of the privileged than to change inc

The current attempts of Hugo Chávez to redistribute income through social pro

in Venezuela have also illustrated that care must be taken to avoid scaring investo

causing them not to undertake new projects and thereby reducing the income av

to almost everyone.

So what remedies are left? They come down to long-term solutions that empowe

ple politically and economically. Broadening the franchise, enhancing the ind

dence and objectivity of the judiciary, and giving citizens better opportunities to in

their incomes would help. An approach that potentially impacts all of these obje

is education, and the Inter-American Development Bank and many government

redoubling their efforts in this area. Education is not as politically sensitive as lan

form or other explicit programs that depend on virtually zero-sum redistributio

wealth or income. In fact, even privileged members of a society can benefit from 

improvement to civic culture that accompanies better educational achievement b

neediest citizens.

Latin America as a region has ample room for improvement in education. The av

Latin American over twenty-five years of age had 4.8 years of education in the ea

1990s, compared with more than six years in the Asian “miracle” countries. Larg

ations existed among countries in the region. At one extreme, approximately hal

population in Guatemala and Haiti had no education, while the average adult ha

than three years of schooling. At the other extreme, countries like Chile and Arge

averaged more than eight years, near the level of industrialized countries. Adults 

most populous Latin American countries, Brazil and Mexico, had averages close 

years of school.55

The case of Chile provides encouragement that poverty can be reduced. In comb

targeted social programs with economic stability and high levels of economic gro

three successive democratic governments were able to reduce the incidence of po

from 40 percent in 1987 to 17 percent in 1998. Investments in human capital and 

protection achieved levels of social indicators such as enrollment in primary edu

youth literacy, infant mortality, and life expectancy similar to those common in i

trialized countries. Despite these advances, however, Chile remains a country of 

disparities in income distribution and marked differences among demographic g
pecially vulnerable.56

Distributive policies cannot be seen as a substitute for economic measures that produce healthy rates of growth. In fact, redistribution should be easier in conditions of

good growth. The best way to improve distribution of income in the short run is to

provide employment opportunities for the poorest sectors of an economy. An Argentine economist, Agustín Monteverde, addressed the issue of growth and income distribution in this way:

The central problem for Argentina, at least, is to recreate the conditions to produce wealth. The coun

try has suffered a long and deep decline in productivity over the last sixty years.

Problems of income distribution are worse in other countries of the region. If, through a framework of

stable rules of the game and more open competition, Argentina will be able to recoup investment and

savings and, consequently, productivity, it will thus also be able to improve the distribution of income.57

Care must be taken, though, lest governments treat temporary improvements in the in

come of their less advantaged citizens as a reason to avoid the politically tough decisions required to implement other measures to improve income distribution. In the

long term, structural change will be required.

The precise effect of poor income distribution on the security issues that we have been

discussing may be harder to predict than the effects of short-term declines in macroeconomic performance. People are likely to react at a given moment to a worsening in

their perceived economic status, especially if it involves unemployment or inflation, either of which can produce sharp declines in purchasing power. One should not, however, underestimate the potentially negative consequences of a situation that ordinary

citizens can perceive as lacking either social justice or the incentive to strive and produce that comes from a strong relationship between effort and reward.

Conclusion and Policy Recommendations

The foregoing assessment leads to a conclusion that poor economic performance often

has nearly immediate security consequences, such as the civil disturbances caused by

the economic collapse in Argentina. Sometimes the expected consequences may not

materialize, as in the matter of support for democracy in the face of economic crises in

Venezuela and Argentina. Migration is tied to economic disparities, but the security

impact of this phenomenon may not be significant unless illegal immigration provides

a conduit for infiltration of terrorists. Crime is correlated with both economic performance and distribution of income.

Surely security problems can flow from factors other than economic performance, such

as crime, corruption, or terrorism. Assessment of the contribution of economic factors

to security problems can be difficult, and some issues merit further research. Among
these topics are the relationships between short-term economic performance, on 

one hand, and migratory flows and security budgets on the other.

One thing is clear: economic downturns do nothing to improve security. The for

analysis leads naturally to several recommendations for policy makers both in th

United States and in Latin America.

U.S.–Latin American relations and cooperation suffer from a kind of attention d

disorder, which manifests itself differently north and south of the Rio Grande. O

U.S. side of that border there is a tendency to think about Latin America only wh

serious threat to U.S. security emanates from the region. Fidel Castro was correc

he claimed credit for creating the Alliance for Progress. President John F. Kenned

would not have proposed, and Congress would not have approved, the largest as

tance program in hemispheric history if there had not been a strong perception 

Castro’s brand of armed revolution posed a serious danger to stability and to oth

interests. Similarly, the second-largest U.S. assistance effort and the creation, und

Caribbean Basin Initiative, of a system to allow goods from Central America and 

Caribbean to be imported duty-free into the United States were responses to the 

posed by a Marxist government in Nicaragua and active revolutionary groups in 

vador and Guatemala during the 1980s. Currently, security and narcotics threats 

a massive U.S. commitment to Plan Colombia.

UNITED STATES LATIN AMERICA

Security Pay attention. There is a security

problem, but like the War on Ter- rorism, the threats are not primar- ily from other states.

Recognize the interconnected

among political, economic, a

curity challenges.

Diplomacy Adopt a more inclusive posture

and rhetoric. With the current, un- precedented consensus on funda- mentals, it is safe to consult with

Latin Americans.

Avoid the temptation to score 

bating points against the Uni

States when serious national 

ests are not at stake. Try to a

democratic standards consiste

Economic Policy Maintain a strong rate of eco- nomic growth and reduce barriers

to imports of goods of interest to

Latin America.

While seeking short-term gro

also invest in programs that o

improvement in the distributi

income even if results will com

only in the long term.

Trade Negotiate a Free Trade Area of the

Americas that meets the need for

progress on access to the U.S.

market for Latin American agricul- tural exports.

Acknowledge the U.S. need f

concessions from the Europea

Union before domestic suppo

agriculture can be terminated

agreement on agricultural pro

sions that would be condition

progress in the Doha Round. 

tiate a termination of export 

dies in the Western Hemisphe

Summary of Policy Recommendations for the United States and Latin Ame
The history of U.S.–Latin American relations is littered with the residue of military

interventions—some welcome, many not, especially after the fact. There is a widespread

perception in Latin America that the attention of the United States has been diverted

elsewhere by the events of 11 September and the war on terrorism. Currently, when the

United States does show concern about Latin America, with the notable exception of Plan

Colombia, its interest is seen to be mainly commercial. When this perception colors U.S.

attention as selective and one-dimensional, it casts suspicion on the interest of the United

States in creating a Free Trade Area of the Americas (FTAA), a fear that Washington is

only seeking commercial advantage. In contrast, U.S. supporters of an FTAA are more

likely to see the benefits as reciprocal among participating countries and extending beyond commerce to improving political and security conditions.

What means are available to escape this box? For the United States, it would help to

give greater recognition to the fact that hemispheric security can be threatened by unsatisfactory economic performance, poor governance, or a skewed distribution of income. This realization could undergird a policy of greater engagement with countries

of the hemisphere and perhaps permit problems to be addressed while they are in an

early stage and can be more easily managed. This approach is compatible with the War

on Terrorism, in which threats come less from other nation states, as in the past, and

more from individuals, groups, and networks of adversaries.

For Latin American leaders, more emphasis on the interconnectedness among political

economic, and security challenges might suggest ways for greater cooperation within

Latin America and more constructive relations with Washington. The United States

could facilitate this dynamic diplomatically by adopting a more inclusive posture and

more constructive rhetoric. Despite some continuing irritants, there has not been a

broader consensus from Alaska to Tierra del Fuego on the basic tenets of democratic

governance and market-oriented economic policy for at least decades and perhaps in

the history of the hemisphere. Thus dialogue should be easier than ever and freer of

risk. Washington can afford to consult as an equal with other countries in the hemisphere—for example, in formulating responses to threats to democracy such as those

seen recently in Venezuela and Bolivia.

Latin American leaders can encourage this process by working to find the common

ground that they share with the United States and to articulate common policies. They

should resist two temptations. One is the appeal of scoring debating points against a

powerful United States on issues outside the Western Hemisphere—say in the Middle

East—that may have little salience in the country making the point but are perceived a

vital by the United States. A similar temptation is the desire to honor a leader, Fidel
States has made him a popular figure in many Latin American quarters. To overl

Castro’s record on human rights and his other political shortcomings does more 

annoy the United States. It undermines the accomplishments of those who have 

for and achieved democratic progress elsewhere in the hemisphere, and it saps th

gitimacy on which further democratic consolidation must be based.

U.S. security objectives, as well as broad objectives of economic and political pro

can be served by measures that strengthen economic performance in the hemisp

The most important contribution the United States can make to this end is some

it wants to do anyway. Maintaining a strong rate of growth in the U.S. economy w

more than anything else to provide opportunities for increased exports and new 

ment that will improve economic performance in Latin America. Latin American 

ers will also wish to do all they can to promote strong economic growth. As they 

naturally on the near term, they should also make investments in education or o

programs that will improve the distribution of income. Governments will of cou

alize that progress on improving income distribution will take time and significa

sults will not likely be realized during their terms in office. History will reward

foresighted leadership, and capable leaders will be able to educate their publics to 

fact that their societies will become more secure as less advantaged citizens gain 

greater ability to progress economically.

The next thing the United States can do to help is to reduce barriers to the impo

of products of special interest to Latin America. This approach was furthered by 

elimination late in 2003 of the temporary steel limits imposed in March 2002. N

quired is better import treatment for agricultural goods, like sugar and orange ju

which are high Latin American priorities in negotiations on an FTAA. Ultimately

agricultural supports and export subsidies will have to be rolled back. Even thou

negotiators naturally want to win agricultural concessions from the European U

exchange for reducing U.S. agricultural supports, Latin Americans will continue 

the United States as unsympathetic to their interests unless this change can be

accomplished.

Latin American leaders know that the primary objective of the United States in a

tural negotiations in the Doha Round is to achieve a reduction in the high expor

sidies and domestic supports employed by the European Union. The United Stat

not curtail its subsidies and supports absent progress toward eliminating the Eur

programs. It should be possible, though, for Latin American and U.S. negotiators 

reach an understanding on U.S. agricultural concessions of interest to Latin Ameri

would be granted when global negotiations made substantive progress on agricultu
of Latin America and the United States in creating a trading environment relatively fre

of intervention in agricultural markets. If Latin American governments were willing to

undertake the ambitious step of countervailing European subsidies or banning agricul

tural imports from Europe, an agreement to terminate export subsidies on agricultural

trade within the Western Hemisphere could be concluded without waiting for completion of the Doha Round of multilateral trade negotiations. The foreign policy benefits

would be positive for both Latin America and the United States. The United States

would gain goodwill in Latin America, the benefits of regional free trade, and allies

against the agricultural policies of the European Union. Latin Americans would get im

proved access to the huge U.S. market and leverage against the European policies that

also retard growth in Latin American exports.
1. Bernard Brodie, War and Politics (New York:

Macmillan; London: Collier Macmillan,

1973), p. 344.

2. Paul Kennedy, The Rise and Fall of the Great

Powers (New York: Vintage House, 1987), p.

xvi.

3. For an extensive analysis of the relationship between perceptions and political violence, see Ted

Robert Gurr, Why Men Rebel (Princeton, N.J.:

Princeton Univ. Press for the Center of International Studies of Princeton University, 1970).

4. Agustín Monteverde, personal correspondence, 12 October 2003.

5. “Foreign Direct Investment Flows into Latin

America and the Caribbean 2002,” CEPAL

News 23, no. 4 (April 2003).

6. Dani Rodrik, “Why Is There So Much Economic Insecurity in Latin America?” (paper

prepared for the World Bank, revised October

1999).

7. OECD, First Estimate for GDP in the OECD

Area, Fourth Quarter of 2002 (Paris: 17 March

2003).

8. Paula J. Dobriansky, Under Secretary of State

for Global Affairs, remarks to Association of

American Chambers of Commerce in Latin

America, 35th Annual Meeting, and 2002

Forecast on Latin America and the Caribbean

(Washington, D.C., 8 May 2002).

9. For a debate over the applicability of the

Washington Consensus in Latin America, see

John Williamson, “What Washington Means

by Policy Reform,” in Latin American Adjustment: How Much Has Happened? ed. John

Williamson (Washington, D.C.: Institute for

International Economics, 1990); and Moises

Naim, “Fads and Fashion in Economic Reforms: Washington Consensus or Washington

Confusion?” (remarks at International Conference on Second Generation Reforms,

Washington, D.C., 1999).

10. Latinobarómetro, as cited in The Economist, 1

November 2003, p. 33.

11. Colin L. Powell, U.S. Secretary of State, intervention at the Plenary of the General Assembly of the Organization of American States

(Santiago, Chile, 9 June 2003).

12. Inter-American Dialogue, The Troubled Americas, Policy Report 2003 (Sol M. Linowitz Forum), p. 17.

crats,” The Economist, 1 November 200

14. Andrés Benavente Urbina, “Rupturism

cial y Vulnerabilidad de las Institucion

America Latina” (paper presented to t

ference on Building Regional Security 

Western Hemisphere, sponsored by th

B. Fascell North-South Center of the U

sity of Miami, U.S. Army War College

U.S. Southern Command, 2–4 March 

(author’s translation).

15. Richard L. Millett, Colombia’s Conflic

Spillover Effects of a Wider War (Miam

Strategic Studies Institute of the U.S. A

War College and Dante B. Fascell Nor

South Center of the University of Mia

tober 2002), p. 30.

16. “Superman Uribe Holds Back the Tid

Economist, 7 June 2003, p. 30.

17. For one example, see Dennis P. Remp

Past as Prologue? A History of U.S. Cou

surgency Policy in Colombia, 1958–196

ami, Fla.: Strategic Studies Institute of 

U.S. Army War College and Dante B. 

North-South Center of the University 

ami, October 2002), p. 31.

18. Luz E. Nagle, Plan Colombia: Reality o

Colombian Crisis and Implications for 

spheric Security (Miami, Fla.: Strategic 

Institute of the U.S. Army War Colleg

Dante B. Fascell North-South Center 

University of Miami, October 2002), p

19. Ibid., p. 34.

20. “A Decline without Parallel,” The Eco

2 March 2002, p. 26.

21. Larry Rohter, “Once Secure, Argentin

Lack for Food and Hope,” New York T

March 2002, p. 6.

22. Julio Cirino, 13 November 2002.

23. Luis Bitencourt, Brazil’s Growing Inse

It a Threat to Brazilian Democracy? Po

pers on the Americas, vol. 14, study 1 

ington, D.C.: Center for Strategic and

International Studies, 2003).

24. Ibid., p. 16.

25. Juan Forero, “As Venezuela Slides, th

Stand By Their Man,” New York Time

April 2003, p. A3.

26. For an expert analysis of the Bolivarian 

and other aspects of the Venezuelan dyn

see Miguel Diaz, Brian Latell, Kenneth “

McKay, Jr., José Sorzano, and Alexan
lan Situation and Recommendations for the Future, Policy Papers on the Americas, vol. 12,

study 6 (Washington, D.C.: Center for Strategic

and International Studies, July 2002).

27. Ibid.

28. Forero, “As Venezuela Slides, the Poor Stand

By Their Man.”

29. Quoted in Larry Rohter, “Letter from the

Americas: Grievances That Can Bring Globalization to Grief,” New York Times, 5 November 2003, p. A4.

30. Ibid.

31. Larry Rohter, “Bolivian Leader’s Ouster Seen

as Warning on U.S. Drug Policy,” New York

Times, 23 November 2003, p. A1.

32. Quoted in Larry Rohter, “Bolivia’s Poor Proclaim Abiding Distrust of Globalization,” New

York Times, 17 October 2003, p. A3.

33. “Arequipa’s Anger, Peru’s Problem,” The

Economist, 22 June 2002, p. 33.

34. Inter-American Development Bank, “IDB

Study Warns of Disillusionment with Democracy,” 9 March 2002.

35. Johann Graf Lambsdorff, “2002 Corruption

Perceptions Index,” in Transparency International, Global Corruption Report: Covering

Worldwide Corruption from July 2001 to June

2000, pp. 262–65.

36. Paul Constance, “Secrecy Is a Form of Corruption,” IDB America (February 2001).

37. “The Longest Journey: A Survey of Migration,” The Economist, 2 November 2002, p. 6.

38. Economic Commission for Latin America and

the Caribbean [hereafter ECLAC], “Almost

Twenty Million Latinamericans and

Caribbeans Are Migrants,” press release, 20

November 2002.

39. U.S. Census Bureau, The Foreign Born Population in the United States: March 2002, p. 2.

40. ECLAC, “Almost Twenty Million Latinamericans and Caribbeans Are Migrants,” p. 2.

41. Ibid.

42. Monteverde, personal correspondence.

43. Ibid.

44. ECLAC, Globalization and Development, LC/

G.2157 (SES.29/3) (presented at Brasilia,

Brazil, 6–10 May 2002), p. 250.

vember 2002, p. 11.

46. International Organization for Migration,

“Trafficking in Migrants: Some Global and

Regional Perspectives” (paper submitted for

the Regional Conference on Migrations,

Puebla, Mexico, 13–14 March 1996), quoted

by Peter Andreas, “Smuggling Wars: Law Enforcement and Law Evasion in a Changing

World,” in Transnational Crimein the America

An Inter-American Dialogue Book, ed. Tom Fare

(New York: Routledge, 1999), p. 96.

47. Andrés Solimano, Remittances by Emigrants:

Issues and Evidence (Santiago: Economic

Commission for Latin America and the Carib

bean, 2003), p. 31.

48. Latinobarómetro, as cited in The Economist, 1

November 2003, p. 34.

49. That this approach was not the only option

commended to the president is illustrated by

the debate within the Bush administration

that Constantine C. Menges, a former aide in

the Reagan White House, triggered with his op

ed piece in the Washington Times on 12 Septem

ber 2002, entitled “Blocking a New Axis of Evil”

(led by Castro, Chávez, and da Silva).

50. Inter-American Development Bank, Facing

Up to Inequality in Latin America: Economic

and Social Progress in Latin America, 1998–

1999 Report. The source for these comparisons

is the database in Deininger and Squire (1996)

which has information on income distribution

based on reliable household surveys in 108

countries. Southeast Asia includes only Hong

Kong, Korea, Singapore, and Taiwan.

51. Ibid., p. 22.

52. Ibid., p. 23.

53. Ibid., p. 22.

54. Pablo Fajnzylber, Daniel Lederman, and Nor

man Loayza, “Inequality and Violent Crime,”

Journal of Law and Economics (April 2002), p. 7

55. All data in this paragraph are from IDB, Facing

Up to Inequality in Latin America, pp. 45–47.

56. The World Bank Group, “Country Brief:

Chile,” available at 1nweb18.worldbank.org/

external/lac/lac.nsf/Countries/Chile/

71BC8229DD493B2A8, p. 1.

57. Monteverde, personal correspondence.
Chinese Interests in Latin America

GUILLERMO R. DELAMER, LYLE J. GOLDSTEIN, JORGE EDUARD

M A L E N A , AND G A B R I E L A E . P O R N

China’s power is on the rise. The reverberations of this critical twenty-first-centu

phenomenon are now starting to be felt in all regions of the world, from the Mid

East to Africa, and even in more distant Latin America. While data on the latter t

remain sparse and preliminary in nature, this chapter represents a first attempt t

lyze China’s emerging interests in Latin America.

What once was a heated debate among scholars has yielded to a firm consensus o

China’s gradually increasing weight in international affairs. Beijing’s recent achie

ments are most evident in the sphere of economic development. Predictions of a

nomic meltdown resulting from a weak banking system have not come to pass. I

Beijing capably navigated the Asian financial crisis of the late 1990s, and also the 

pact of the 2003 Severe Acute Respiratory Syndrome (SARS) epidemic. Especiall

the wake of its entry into the World Trade Organization (WTO) in late 2001, Ch

growth projections for the foreseeable future are robust.

China’s new power is not restricted to the economic realm, however. Indeed, Beij

has emerged as an important voice on issues ranging from the future of Afghani

the Iraq question, to the immense challenge of denuclearizing the Korean Penins

China’s active diplomacy in the latter crisis has led some China watchers to heral

new era of responsible and cooperative Chinese diplomacy. The interpretation h

been given additional impetus by what has been widely described as a major “ch

offensive,” directed chiefly at important proximate states such as South Korea an

tralia. These hopeful appraisals, however, are challenged to some extent by the re

tion that a not insignificant proportion of China’s new wealth is fueling an ambi

program of military modernization.

If Beijing’s ambitions grow in tandem with its capabilities (as has been the case w

other great powers), the geopolitical ramifications of China’s emergence could b

in every corner of the globe. Moreover, China has been adopting omnidirectiona

CHAPTER THREE
been the search for new markets, but Beijing is also seeking the promotion of greater

international multipolarization. Consistent with the foregoing analysis, specialists have

begun to consider China’s growing activities in regions outside the confines of East

Asia. China’s emerging roles in South Asia, Central Asia, the Middle East, Africa, and

Europe are now receiving regular and careful scrutiny. A noteworthy exception is

China’s developing relations with Latin America. The purpose of this chapter is to assess the nature and extent of Chinese activity in Latin America and its strategic implications for hemispheric security.

The chapter concludes that at this time, Chinese activity in Latin America is largely

confined to seeking out expanded trade opportunities. While the PRC also supports a

general policy of multipolarization, there is no evidence of an emerging Chinese threat

to this region. Washington and other regional states will still want to monitor certain

sensitive issues closely, for example, Sino-Cuban relations and Chinese commercial acquisitions in the Panama Canal region; but the overall picture is one of benign expansion, characterized by increasing trade and cooperation with the states of Latin America.

The analysis begins with a broad examination of China’s foreign-policy decisionmaking structure; this is followed by a discussion of the new leadership’s evolution and

general policy directions. This background forms an essential context for the subsequent description of Chinese interests in Latin America; readers familiar with Chinese

foreign-policy practices may want to skip ahead to that section. A final section explore

China’s relations with Argentina in some detail, as a “case study” for Beijing’s emerging

diplomacy in Latin America.

PRC Foreign-Policy Decision Making

China is a socialist state, where actual power differs from formal power. The Chinese

Communist Party (CCP) leads and directs all actual governing processes. The Standing

Committee of the politburo represents the core of true power in Beijing, and its members are the leaders who set the overall direction of the party, government, and armed

forces. Within the Standing Committee is the Foreign Affairs Leadership Group

(FALG), which is in charge of assessing and making decisions on international issues.

This working group is supported by four key ministries, including Foreign Affairs (Li

Zhaoxing), Foreign Trade and Economic Cooperation (Lu Fuyuan), Defense (Cao

Guangchuan), and Intelligence (Xu Yongyue). If a matter involving Latin America

arises, it falls under the responsibilities of one of seven divisions, denominated “America and Oceania,” supported by a Directorate for Latin American Affairs.
General Liang Guanglie. It is noteworthy that China’s Ministry of Defense has an

“American/Oceania Bureau,” but the General Staff has no special bureau designa

cover Latin America, whereas it does have bureaus for other regions of particular 

cern, including North America, Europe, West Asia, and Africa.1

When dealing with specific decision-making issues related to Chinese–Latin Am

matters, the FALG calls upon two agencies. From the national government appar

there is the Foreign Affairs Ministry Directorate for Latin America, to which the 

eral Directorate for America and Oceania (led by He Yafei) is subordinated. From 

academic subsystem’s side, there is the Institute for Latin American Studies (led 

Mingde), which is part of the Chinese Social Sciences Academy.

Possible Evolution of the Chinese Power Structure

China undertook an important shift of leading figures within its internal power 

ture during 2002–2003. China’s new leadership, including, most prominently, Pr

Hu Jintao and Prime Minister Wen Jiabao, is described as China’s “Fourth Gener

leadership. The new leaders have common characteristics, such as coming of age 

ing Mao’s catastrophic Cultural Revolution. They are, as a result, more pragmatic 

much less ideologically imbued than their predecessors, but they also retain stro

tionalist convictions.

The Fourth Generation is mainly made up of technocrats who have climbed the 

and local bureaucratic ladders by making use of their specialized knowledge. The 

Generation leaders specialized in the “hard sciences”—most of them were engin

but the Fourth Generation is characterized by an abundance of economists and l

yers. This trend shows that new leaders are leaning toward the social sciences, wh

might indicate profound changes on China’s political horizon. The Fourth Gene

leadership is noteworthy in that it completely lacks military experience.

There is no doubting that the new leaders are a generation of political reformers

will most likely fight widespread corruption and nepotism by opening up the Pa

membership to private entrepreneurs and business executives. This does not nec

ily imply that they will become “pro-Western,” however, because they appear to h

strong nationalist tendencies. They visualize the Party as a means to an end, facilit

control over China’s vast population and maintaining conditions of stability and g

On the one hand, Beijing has sought to cooperate with Washington in the new W

Terror. For instance, China fully supported Operation ENDURING FREEDOM and a

engaged in counterterrorism cooperation with the United States. On the other han

China recently has felt itself encircled by U.S. military forces, now deployed in ne
pensate for Washington’s geopolitical gains by accelerating economic development and

elevating national security as a national priority.

To mitigate the tremendous influence exercised by the only superpower remaining afte

the end of the Cold War—namely, the United States—the new generation of leaders in

China will very likely try to enhance their relations not only with their immediate

neighbors but also with Europe, the Middle East, Africa, and Latin America. To date,

China’s vital objectives continue to emphasize economic development objectives: the

improvement of rural living standards and energy-sector infrastructure, and the development of high technology. Beijing knows that achieving these objectives will inevitably require external support and assistance, wherever it can be found.

In sum, China’s emergence presents a great unknown for the twenty-first century and

beyond. While its strategic orientation has tended to be defensive and rather narrowly

focused on guarding its own sovereignty, it is difficult to predict whether a more capable China will adhere to this paradigm. On the other hand, it is quite certain that

China’s internal development will experience instability and difficulties in the further

development of a modern state and economy. Domestic uncertainties may in turn precipitate unsettling changes in Chinese foreign and security policies.

China’s Strategy and Policy over the Coming Years

In the political arena, China professes a desire to act responsibly as a great nation, play

ing an important role in safeguarding peace and international security by promoting

justice and equality. Beijing opposes hegemonic practices or the use of force by powerful nations to impose their will on the rest of the international community.

China promulgates the so-called Five Principles of Peaceful Coexistence for creating a

“new” international order: one more balanced, peaceful, and fair; one where mutual re

spect for sovereignty and territorial integrity is maintained; one without aggression,

without interference in domestic affairs, and with peaceful coexistence as well as equal

ity for all, to achieve mutual benefits through cooperation and common development.

During the 1990s, many in Beijng perceived that Washington often acted arrogantly to

ward the PRC, injuring China’s national pride, violating its sovereignty, and seeking to

weaken its international influence among other nations. They also viewed the United

States as arrogant, “obsessed” with freedom and democracy, guided by a mission to

change the communist regime that governs the country, and desirous of playing the

role of “world policeman.”

2

Many Chinese admit that they do not live in a democratic society according to Western

standards, but at the same time they recognize that, considering the immense size of
great strides, especially in the last two decades. The PRC economy has undergon

portant changes, growing at an average of 7 to 8 percent a year, and “corrupting” 

cornerstones of the communist ideology and structure by, among other things, d

oping a new legal system, increasing the power of legislative bodies, forcing gove

ment leaders to retire at a certain age, and allowing businesspeople to take part i

Party’s structure.

Nevertheless, China’s progress regarding human rights has been disappointing, e

cially given the severe crackdown on the Falun Gong movement. Beyond this gro

still many more Chinese who criticize government inefficiency and state bureauc

but believe that Chinese themselves are capable of solving these problems withou

external “advice.”

In general, China’s current leaders are staunch advocates of social stability. They 

believe in excessively “accelerating” the democratizing process for fear of politica

social chaos. They know very well from their history that anarchy has cost China 

lions of deaths and grave national humiliation. They have also observed how a sw

transition from an authoritarian to a democratic system (as in the case of the So

Union) can result in social collapse and chaos.

This seems to explain why Chinese now accept restrictions on their freedom and 

vidual rights. A comparison with the much more democratic India, which contin

be fettered by population pressures and unrelieved squalor, yields the tentative co

sion that the Chinese argument may have some merit.

Chinese believe that a multipolar world will emerge at some point, but they do n

deny that the world is currently unipolar, with only one dominating superpower

Chinese feel that the United States has taken advantage of the historical “opportu

presented by the War on Terror to adopt an offensive, neoimperialistic, and inter

tionist national strategy that allows it to secure world supremacy. They sense tha

United States uses international organizations to weaken and isolate certain coun

manipulating international laws, rules, and standards, and adopting the tradition

“gunboat diplomacy” approach, in search of a new “containment” strategy towar

tions such as China, which is undergoing successful development and could, ther

become a peer competitor in the future.

Chinese grand strategy currently focuses on striking a balance between two often 

posing objectives. The first is developing “comprehensive national power,” which 

cludes a qualitative and quantitative assessment of political, economic, military,

scientific, technological, and foreign affairs issues so as to determine relative pow

among nations. The other objective is the maximum exploitation of what Chine
Chinese explain it by saying that it refers to the alignment of forces or the “(natural)

tendency of things” and say that a skillful strategist can exploit it to attain victory. This

concept, so it is maintained, will allow them to preserve their national independence

and contribute to China’s momentum in its effort to increase its national power.

4

China’s grand strategy revolves around the following pillars:

• Contribute to the creation of a peaceful international environment so that China can focus on

its economic development.

• Attain Taiwan’s national reunification.

• Increase the scope (magnitude) of national power to build a Chinese pole within a desired mul

tipolar world future.

• Build a new international political and economic order with less power and wealth inequality

between rich and poor and more relevance to the principle of sovereignty.

5

China has adopted omnidirectional initiatives toward all regions of the world. Its pri

mary objective has been the search for new markets, seeking new options and the

promotion of greater international multipolarization. Beijing has been patiently but

unrelentingly establishing tighter ties with third-world countries by encouraging

greater pluralism in terms of power.

6

China is aware that the United States could label it as an “adversary” and is making efforts not to be placed in that category by avoiding any confrontation. This policy corre

sponds to China’s highest security interests, depicted in a long-term strategy.

7

The

country’s leaders seem to have concluded that it would make no sense to confront the

United States (at least in the near term) since it would lead them to international isolation, a situation Beijing is anxious to avoid. On the other hand, some scholars interpre

the recent warming in U.S.-China relations as a conscious effort by the Chinese leadership to husband its strength during a “strategic pause,” while the United States is distracted by conflict in the Middle East and elsewhere. Unfortunately, a sudden reversal

in Chinese policy that would seek to take advantage of America’s distractions, while

perhaps unlikely, cannot be ruled out.

Economic Policies

China realizes that significant changes are taking place in the world economy and accordingly has become more global and more economically competitive, so as to gain

new markets, financing, and resources. In addition, Chinese transnational companies

have gained increased market share. Beijing is also aware that globalization has transformed what in the past was an era of trade among nations into a new era where transnational production prevails. Beijing has accepted the fact that scientific and
knowledge has become the true driving force behind economic growth.

As a consequence of economic liberalization, which has permitted China to susta

high growth rates, new phenomena have appeared, such as unemployment and

subemployment. There are over one hundred million unemployed people, a fact 

could unleash significant social pressures. Large and volatile protests by angry w

especially in China’s “rust belt” in the northeast, are becoming more and more co

mon.8

A related development is the evolution of a very large class of poor interna

grants who have moved illegally into China’s large cities in search of work. This s

problem has also generated a huge increase in illegal activities, especially drug tr

ing, gambling, prostitution, pickpocketing, and other crimes.

Defense Policies

China is implementing a campaign to generate profound changes in its defense s

in terms of both its capabilities and its image. Aware that its military equipment 

technologically inferior to that of developed countries, in particular the United S

the PLA has been downsizing its active duty personnel and has been seeking to d

specialized troops and new tactics.

To avoid creating suspicion among neighboring countries and other countries ar

the world, the PLA has simultaneously carried out a full doctrine review to incre

transparency regarding its plans and military equipment. One of the methods em

ployed to this end has been increased military-to-military contacts with Asian na

and the rest of the world as well.

Thus, Chinese military delegations have been making regular visits to Argentina

ested in gaining expertise in various areas ranging from the handling of equipme

ordnance to personnel management, selection, and evaluation processes. The PL

recently opened up its military bases to journalists and shown their facilities and 

way of life to the public. It is also proud to say that China has no imperialist inte

whatsoever and that, given the country’s position of technological inferiority, it d

not pose a risk to other countries. Despite measured progress in enhancing trans

ency, many significant questions regarding the PLA remain shrouded in mystery 

speculation; not the least of these is the problem of China’s actual defense expen

tures. Indeed, the true figure is estimated to be many times greater than the mod

ficial figure.

China’s continuing naval development facilitates its new military diplomacy. For 

first time in its naval history, a small People’s Liberation Army Navy (PLAN) flot

circumnavigated the world in 2002. The missile destroyer Qingdao was accompa
Ukraine, Greece, Portugal, Brazil, Ecuador, and Peru. Clearly, Beijing believes that it is

now more useful to remain open, instead of isolating itself from the outside world and

raising suspicions regarding its intentions. Certainly, Chinese leaders want to change

their image, internally and externally, to leave behind the “Tiananmen Square

Syndrome.”

Despite these positive developments, caution is warranted, because China’s military

modernization appears to be progressing rapidly. As part of a new aerospace-maritime

orientation—the strategic consequence of China’s largely pacified land borders—

Beijing is making significant investments, especially in Russian armaments. New purchases include a second batch of Sovremenny-class destroyers, eight new Kilo-class

submarines, fighter-bombers specifically configured for maritime operations, and radar aircraft to provide over-the-horizon targeting. These programs are complemented

by co-production agreements, in addition to indigenous production programs, that

parallel almost all large purchases. Russian scientists admit that they may eventually be

outclassed by Chinese defense science, which is rapidly improving. China’s large and

increasingly sophisticated short-range missile force is evidence of this development.

Beijing is also undertaking a major effort to modernize its nuclear forces. At the same

time, training is undergoing a genuine revolution as the PLA integrates competitive

“red versus blue” exercises that encourage commanders to make “on the spot” judgments. Along with reforms in recruiting and military education, such measures have

the potential to make the PLA a formidable future opponent, especially in the East

Asian littoral.

Chinese Foreign Policy and Latin America

The PRC views Latin America as a marginal or peripheral region in political and economic terms. The absence of a settled and stable security structure in East Asia, in addition to its still-limited capacities, obliges China to focus its diplomatic efforts mainly

on its neighbors for the time being.

As a result of this focus, Beijing has generally left aside regions that are geographically

distant from China or have little international influence. Among the states of the developing world, China has pursued ties in Africa rather aggressively. Beijing’s longstanding criticism of imperialism, together with its refusal to consider the human rights

situation in partner countries, has enabled it to establish strong bilateral ties with such

strategically significant states as Nigeria, South Africa, Sudan, and Egypt.9

By contrast,

Latin America appears to be a lower priority, perhaps owing to the region’s strong

identification with the West. However, the fact that several Latin American countries
is a matter of concern to Beijing.

The Latin American and Caribbean countries that maintain diplomatic relations 

the PRC (and dates on which they became official) are: Cuba (28 September 196

Chile (15 December 1970); Peru (2 November 1971); Mexico (14 February 19

Argentina (19 February 1972); Guyana (17 June 1972); Jamaica (21 November 1

Trinidad and Tobago (20 June 1974); Venezuela (28 June 1974); Brazil (15 Augus

1974); Suriname (28 May 1972); Barbados (30 May 1977); Ecuador (2 January 19

Colombia (7 February 1980); Antigua and Barbuda (1 January 1983); Bolivia (9 

1985); Nicaragua (7 December 1985); Uruguay (3 February 1988); Bahamas (23 

1997); and Santa Lucia (1 September 1997).

The fourteen Latin American countries that recognize the Republic of China (Ta

include Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, Granada

temala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Saint Kitts and Nevis, an

Vincent and the Grenadines. It is important to note that the total number of cou

that still recognize Taiwan as an independent nation is only twenty-six, thus und

scoring the significance of the proportion of such countries from the Latin Ame

region.

Another issue that has awakened Chinese interest in the region has been the sign

weight that Latin America represents as a regional voting block at the UN. This i

portant to Beijing, for example, in the case of limiting the scrutiny of the UN Hu

Rights Commission (UNHRC).

The PRC is a permanent member of the United Nations Security Council and in 

setting has depicted itself as the representative of third-world countries. Howeve

when the time came to show loyalty toward these countries, it became evident th

China consistently privileged its own national interests, as expected, and in so do

hampered its relations with developing states.

Occasionally, the Chinese press still employs Latin American problems as a prop

tool against American “hegemonism.” For example, a detailed spread in the Janu

2002 issue of Guoji Zhanwang (Shanghai Institute for International Relations) sh

criticizes the U.S. training program for Latin American military officers under th

headline “School for Autocrats.”

10 In another relatively recent detailed Chinese su

of Latin America, the authors make no secret of their contention that China and 

America together face a common struggle against U.S. “hegemonism,” nor do th

to bury the issue of historical PRC support for Latin American revolutionary mo

ments.11 Of course, these ideological efforts do not compare in size, scope, or ide

cal distortion with propaganda initiatives undertaken in the Maoist era.
emergence of the trade factor in Latin American–Chinese relations. Latin America is

increasingly vital to China’s acquisition of commodities such as copper and other

minerals, steel, grains, oil, wool, frozen fish, fish meal, sugar, leather, and chemical

substances. China’s sales to the region include light industry products, textiles, machin

ery, toys, and tools.

However, this relationship is not limited to buying and selling products. It also include

the creation of new markets and the introduction of China’s companies into South

America. As an example, in 2001, Chinese exports to this region reached almost seven

billion dollars, and although they represent only 3 percent of its global sales, Beijing

enjoys a favorable trade balance of three billion dollars.

Sino-Brazilian trade relations are at the forefront of these trends. When Brazilian presi

dent Luiz Inácio Lula da Silva traveled to Beijing in May 2004, he was accompanied by

four hundred Brazilian corporate executives. This is understandable given that SinoBrazilian trade increased an impressive 69 percent in 2003 to $6.7 billion—and was up

another 40 percent in the first quarter of 2004. As China announced three billion dollars in new investments for Brazil, the Brazilian government has hinted at up to five

billion dollars in expected Brazilian direct foreign investment in China.12

At the center of the soaring Sino-Brazilian trade is Beijing’s seemingly insatiable appetite for steel. In 2003 China imported 2.4 million tons of Brazilian steel, worth $730

million, making China one of Brazil’s top three export destinations. Among other international investors, Baosteel Shanghai will be pumping capital into the Brazilian stee

industry with the goal of increasing production capacity by 30 percent over four years.

Of course, such close trade links with China entail inevitable risks. For example, upon

news in the spring of 2004 that Chinese leaders were seeking to curb lending to slow

growth and prevent “overheating,” stock prices for Brazilian steel companies sank on

the São Paolo Stock Exchange. On the whole, however, investors remain bullish with

respect to Sino-Brazilian trade, and Brazilian steel prospects in particular, probably because of Brazil’s enormous iron ore reserves.13 Not coincidentally, Argentine president

Néstor Kirchner visited China just a month after Lula—also accompanied by a huge

delegation of business executives.

Oil also plays a role in China’s commercial strategy for Latin America. In 1993, China

became a net oil importer. Already, China’s booming consumption of oil appears to

have significantly influenced the world price during 2003–2004. PRC demand for oil,

moreover, is projected to double by 2015. Over the last decade, the China National Petroleum Corporation has pursued an aggressive purchasing strategy, securing holdings

in both Venezuela and Peru, in addition to making major investments in fields from
during the troubled tenure of President Hugo Chávez, while Beijing’s relations w

Caracas have blossomed, has raised concerns in some quarters.15 As yet, however

anxieties do not rise to the level of national security concerns.

Beijing’s economic interests in Latin America are also based on a “South-South” 

eration scheme in the areas of science and technology. Beijing is looking for the m

developed countries in the region from which to gain training expertise in variou

matters and to incorporate into its own research base. This explains its intention 

tablish relationships with Brazil and Argentina, especially in the aerospace, satell

nuclear, steel, food processing, and agricultural industries, software development, 

telecommunications. Within the sphere of technology transfer, the China-Brazil Ea

Resources Satellite (CBERS) project is a special concern, because China is making v

significant strides in remote sensing. These efforts may significantly assist the PLA 

over-the-horizon targeting, which remains a major obstacle to PLA operations at p

Paradoxically, the protectionist policies of developed countries and the creation 

tegration arrangements in their respective areas of economic influence—such as 

North American Free Trade Agreement (NAFTA) involving the United States, Ca

Mexico, and the European Union—is the central reason why economic ties betw

China and Latin America have increased their pace. Notwithstanding the abo

China is not expected to make significant investments (beyond Brazilian stee

this region, at least not until it reaches a level of industrialization that can sat

own needs and make it globally competitive—an objective that will take some 

to achieve.

In terms of trade, it is worth noting that despite the reasonable increase in trade 

the last few decades, there are still some issues that hinder its overall developmen

the first place, both China and Latin America benefit from an abundance of raw 

rials, a fact that does not contribute to trading these items due to an absence of r

rocal markets. Its manufactured goods are also quite similar and do not contribu

this sense either.

Second, both China and Latin America lack capital and significant state-of-the

technologies. Third, geographical distances impose an important limitation, al

though some transportation agreements have been signed. The irregularities o

time routes and the absence of scheduled flights between the two regions have 

adverse impact.

Fourth, both China and Latin America have weak currencies. In China’s case, it i

result of the increased demands of its growing economy, and in South America’s 

the crisis was generated by its large foreign debt, discouraging it from increasing 
standing limits the interaction; difficulties range from ignorance about cultural and so

cial realities to ignorance regarding opportunities their respective markets could offer,

and their respective rules and regulations. Finally, despite the huge efforts China has

made in the last two decades, the differences between the economic systems present an

additional obstacle to the normal evolution of trade relations.

Therefore, although political and economic contacts have successfully developed

within institutional frameworks, they have not yet grown to an extensive scale. The ma

jor visits by both Brazilian and Argentine presidents in 2004, however, could herald a

new era in Sino–Latin American trade.

The turnaround made by Chinese diplomacy since the 1980s and its foreign economic

policy has generated a Copernican shift in Beijing’s relations with the rest of the world

China has become much more predictable, facilitating cooperation despite the fact tha

Latin American and Chinese economic and political systems are extremely different.

A Chinese specialist on Latin American affairs, Xu Shicheng, recently observed during

a presentation in Argentina that for China, Latin America constitutes a promising region in terms of investments.

16 To modernize its economy, China will need a large

amount of natural resources, and Latin America has most of them, including oil, iron,

copper, wood, and cotton. China has begun to establish textile centers in Latin America.

It has also made progress in certain concepts as it has realized that some technologies of

high and medium-size categories can be competitive in the Latin American market.

Xu further described the policies proposed by China in its relationship with the region

as follows: “reciprocal benefits, the exchange of products to meet mutual needs, learning from each other, compensating for deficiencies and promoting joint development.”

He explained that the goal is to combine trade with industry, and trade with investments. Xu also mentioned that his country wishes to strengthen international financial

ties and cooperation with Latin America so that companies from both sides can have

the resources and credit to increase trade. He concluded his presentation by stating tha

for China, the dispute between developed and Asian countries for the Latin American

market will deepen. He referred to the fact that China is aware of some of its problems

in tapping the Latin American market, including the low quality of some export products and the relatively poor state of service and support functions, as well as a paucity

of computer data on this market.

There is no doubt that the introduction of China into the WTO will have a strong impact. China will have to open up its markets to a wide variety of products from Latin

America. On the other hand, it will no longer be able openly to subsidize certain expor

goods that unfairly compete in the international market with Latin American products
costs, the states of Latin America will have to be prepared to compete in areas th

labor-intensive. Overall, if the positive and negative aspects of this relationship a

weighed, it is apparent that there is a great benefit from trade increases for both 

Security Issues of Concern

Political and ideological problems have receded on the Sino–Latin America agen

yielding to the primary issue of trade. Nevertheless, there remains a set of uncon

tional and conventional security questions that merit continuing analytical atten

The “Triads”

The so-called triads, criminal organizations that currently have achieved a mode

of activity in Latin America, trace their origins back several centuries. Historicall

were actually formed to expel invaders from their territories; subsequently, they 

to hold key positions in the power structure of Chinese civilization. In modern t

however, they are associated with criminal, even mafia-like, activities. There have 

numerous triads, including “14K,” the “Green Gang,” the “Red Gang,” and Chiu 

to name a few, most of which moved to Hong Kong and Taiwan after 1949.

The triads recently gained notoriety as they expanded to cover a wide range of tr

tional criminal activities such as blackmail, clandestine gambling, heroin traffick

legal immigration, and money laundering. It is difficult to gain a deep knowledg

the characteristics and modi operandi of these groups, but a general idea can be 

tained from interviews, in which sources have requested anonymity for fear of re

tion. Triads are exceedingly difficult to infiltrate, since they are based on tight eth

and geographic filial bonds. They are highly sensitive, intuitive organizations tha

vide a quick counter to any attempt at penetration.

These organizations recruit young people greedy for money, power, and prestige

have now spread all over the world and have adapted their business to modern ti

to include the forging of luxury watches, software, and documents; slavery; and t

in opium and heroin. These dealings allow them to collect multimillion-dollar su

fund their activities throughout the world.

One of the most powerful triads in Latin America, the so-called Fu Chin, is nam

ter a town in the province of Fujian, in southern China. Its main business has be

trafficking in human beings, and its modus operandi is as follows:

• It provides immigrants with forged documents.

• It directs immigrants to a certain country of destination, which is selected on 

basis of mafia business locations.
perform clandestine work, often in the clothing industry or the restaurant business

• The mafia associates with families that have managed to immigrate with some

money, which helps it expand its business. These families are often required to pay

the mafia a monthly fee in exchange for “protection.”

• To exert a tighter control over illegal immigrants, the mafia organizes them

according to their origin or dialect and forbids them to mix among themselves.

• It subjects those who refuse to pay the requested fee to a triad code providing for no

“second chances.” Denunciation is also grounds for death.

• In Argentina alone, where the ethnic Chinese population amounts to just thirty

thousand residents, estimates show that only one out of one hundred ethnic

Chinese traders dares to denounce acts of intimidation.

• Once a given family has been able to collect more funds, they might obtain the

necessary documents to enter the United States, which is often their final

destination.

It is worth noting that there is no evidence linking these activities with the PRC government. In fact, whenever illegal immigration incidents have been reported, as in

Venezuela in May 2003, Chinese authorities have strongly denied any connection

with them.

The activities conducted by criminal organizations of Asian origin have already attained proportions of an “international threat” on account of the organizations’ abil

ity and capacity to establish connections all over the world. In fact, they have

managed to enter into temporary partnerships with ethnic secret organizations in

the Western Hemisphere and, at the same time, have undertaken illegal business

activities.

Illegal Immigration

The issue of illegal immigration from China began to attract public attention as a result of certain incidents—for example, when the ship Golden Venture, loaded with 286

Chinese immigrants, ran aground off New York on 6 June 1993. The most recent tragic

event involved 58 immigrants who were found dead in a lorry container at Dover, England, in June 2000.

There is widespread concern in different countries about the prospects of a massive

emigration from China, the most densely populated country in the world. Some countries fear that if such a development were to occur, its impact might destabilize their

societies at a time when few economies in the Americas are performing really well.
ery in the past, and has inevitably become closely associated with international o

nized crime. Ethnic Chinese involvement in human trafficking appears to be

characterized, in particular, by its versatility and flexibility to operate and mutate

worldwide networks handling the different approaches to a given host country. I

grants enter the Americas through a combination of maritime, air, and land mea

with intermediate stopovers in Canada, Mexico, or countries in Central America 

Caribbean.17 Willard H. Myers, an expert in Asian organized crime, ascribes muc

the illegal immigration in North and South America to Taiwanese triads. These h

used Belize, the Dominican Republic, and the Caribbean islands, including Jama

Puerto Rico, as bases of operations from which Chinese immigrants can enter th

United States.18

Chinese immigration is not bad in itself, of course, since it links peoples and cult

closer together, including legal trading activities. The problem lies in the possibil

that undesirable elements belonging to supranational criminal organizations ma

in. This apparent risk should not cast a shadow over the above-mentioned advan

of beneficial, controlled immigration that offers economic benefits without prec

ing social conflict and instability or jeopardizing state security.

Migratory flows are transnational issues that require much greater scrutiny, espe

in the wake of the terrorist attacks of 11 September 2001. However, these issues a

ficult to assess, given problems in evaluating the quality of available data. In fact

mation sources are not always thoroughly reliable; even more important, incenti

and motivations vary from one migratory group to another, and it is very difficu

identify a group’s interests accurately.

Today, the Chinese population residing overseas amounts to approximately forty 

lion people. They are a natural link for promoting the expansion of all kinds of t

exchanges between their countries of residence and the “motherland.”

Presence in the Tri-Border Area

In the northeast region of Argentina, on the borders of Brazil, Paraguay, and Argenti

there is a tri-border area, also known as the Triple Frontier, where the Chinese comm

carries out a great deal of activities. Some fifteen thousand Chinese residents live 

Paraguayan city of Ciudad del Este alone.

As an indication of the commercial dynamism of that social segment, the Taiwan

bank Chinatrust established one of its nine international branches in that city, an

first and only one in Latin America (the rest are located in Hong Kong, India, In

sia, Great Britain, the Philippines, Thailand, Vietnam, and Japan). Back in 1998,
Lloyd’s, ABN Amro, and Citibank.19

This dynamism, coupled with the illegal trade of Asian goods, led to the presumed

presence of Chinese mafias in the area, which apparently blend in perfectly with villagers. These mafias are believed to have come from mainland China and Taiwan, and

their main business is to charge for “protection” services to local Chinese merchants, a

well as to collect “taxes” for containers these merchants import from Asia. When the

mafias handle the containers themselves, merchants are obliged to buy those goods to

avoid retaliation.20

An episode that supports the above allegations occurred in June 2001, when a Chinese

citizen, Wu Wenhuan, accused of being one of the mafia leaders in the area, was captured in Ciudad del Este. The case appears to have proved that this group used stamps

stuck to illegally imported goods to identify the mafia leader who ruled their sale, and

his company (Floresta S. A.) was found to have dodged taxes in over six hundred import transactions.21

It has also been proven that these mafia groups travel between Ciudad del Este and Foz

do Iguaçu and have North American and European passports.22 The Chinese mafias op

erating in the region allegedly carried out illegal operations with a terrorist group

called Gamaa Islamiya. According to a newspaper investigation article by Brazilian

journalist Roberto Godoy, there seem to be at least two organizations involved: the

Sung-I and Ming “families.”

23

The Sung-I family, based in the Paraguayan city of Hernandarias, appears to be using

three film-developing and electronics shops in Ciudad del Este as a cover. In December

2000, the Sung-I family allegedly sold an ammunition batch to the Gamaa group via a

medical equipment shipment en route to Egypt. The Cameroon flagship was intercepted at the Cyprus port of Limassol. The Ming family apparently manages Gamaa

funds from Ciudad del Este, through a financial circuit that could include Guyana and

the Cayman Islands. Transnational criminal networks rooted in Chinese ethnicity are

among many threats of this type confronting the states of Latin America.

Sino-Cuban Relations

China’s rapidly improving ties with Cuba are also of some concern. During the Cold

War, these ties were strictly limited by the Sino-Soviet conflict. Since the Cold War,

however, the relationship has strengthened considerably. The most important Chinese

leaders have all visited Cuba, including Jiang Zemin (1993, 2001), Gen Fu Quanyu

(2000), Li Peng (1995), and Hu Jintao (1997). Beijing has extended four hundred million dollars in loans to Havana, but is yet to become one of Cuba’s major creditors and
might take over the Russian signals intelligence center at Lourdes, since Moscow 

cided to abandon the facility during the fall of 2001. However, there are no credi

sources to confirm these rumors, which may have emerged from Russian sources 

ulterior motives.24 A more credible accusation concerns new Chinese arms sales t

Cuba. This accusation was leveled by Assistant Secretary of State for East Asian a

cific Affairs James Kelly during testimony before Congress in mid-2001. Beijing i

that its military supplies to Cuba are of a nonlethal nature, for example, uniform

While it is difficult to ascertain the true nature of these transfers, it is apparent th

attempt by Beijing to play a “Cuban card” within the larger context of the Taiwan 

lem (i.e., parallel arms sales, etc.) appears outlandish, at least for the near and m

term. On the other hand, this expanding relationship certainly bears close watch

PRC Shipping Initiative: Taking Control of the Canal Zone?

Recent developments strongly suggest that China is seeking to develop a shippin

egy to support its foreign-trade activities through resources generated by the shi

industry. In 1996, the government of Panama granted the Panama Port Compan

(PPC) a contract to operate both access ports to the Panama Canal: Cristóbal on 

Caribbean side and Balboa on the Pacific Ocean. The PPC, a subsidiary of the H

Kong–based company Hutchison Whampoa Limited, is a port operator currently 

dating the technology at both ports. This company handles 70 percent of the con

traffic all over the world. It has now been given the chance to develop what used 

the U.S. naval base at Rodman Point, close to Balboa.

Some American analysts, arguing that this company is linked to the Chinese mili

have objected to this agreement. Indeed, it is quite plausible that, although all Ch

companies serve Chinese economic interests, some could currently be used as “s

or “cover” to hide certain military activities or even others with a dual purpose.

The Hutchison Whampoa company has denied these allegations. The truth of th

ter is that, with this investment, China secures some limited control over maritim

fic in the area as well as some degree of influence over how to operate the canal. 

particular concern would be Chinese efforts to sabotage the canal through specia

erations during war (unfortunately, a rather simple operation); and of somewha

concern is the value of observing U.S. Navy (USN) activities in general. On the o

hand, it should be noted that aircraft carriers are too large to transit the Panama 

raising a question as to whether closure of the canal would actually impact a U.S

China maritime conflict scenario. USN submarine operations, however, which co

play an important role in any maritime conflict with China, could be impacted i

most dire scenarios. The effect on Atlantic versus Pacific basing for such critical 
that the United States would have multiple options for retaliation if Beijing were to attempt to hold the canal hostage.

In the fall of 2002, the Clinton administration assessed the issue and concluded that

Chinese ownership of various port facilities in the canal region did not represent a national security threat. Indeed, from an economic standpoint, it is quite feasible that the

most important objective could be the use of this company as a means to channel investments and gain control of shipping. Nevertheless, it will be prudent to monitor

these developments closely.

Case Study: Argentina’s Relations with China

Although links between Argentina and China date back to over four centuries ago,

more fluid exchanges were initiated in the nineteenth century over trade and immigration matters. However, from a political standpoint, relations with China gained significant momentum only during the 1980s, as a result of a need to diversify international

economic relations and also as a response to the globalization phenomenon.

The Political Dimension of Argentina-China Relations

After the launching of China’s reform policy in 1978, Beijing decided to focus strongly on

economic growth. As a consequence, the material aspect of the interaction between China

and Latin America developed seamlessly, leading to a deepening of political ties and signaling the beginning of the end of China’s chronic trade deficit with the region.27

Once Argentina returned to democratic governance in 1983, bilateral ties were placed on a

firm foundation of friendship and cooperation. Heralding a new era of goodwill, Foreign

Minister Wu Xueqian visited Buenos Aires in April 1984 and signed a cultural exchange

agreement. A year later, Dante Caputo, the Argentine foreign minister, traveled to Beijing

and signed a cooperation agreement on the peaceful use of nuclear energy.

Toward the end of 1985, Premier Zhao Ziyang paid a visit to Argentina, Brazil, Colombia,

and Venezuela and announced a series of principles for enhancing relations between China

and Latin America. The so-called Four Principles for Relations between China and Latin

America were the following: (1) Peace and Friendship; (2) Mutual Support; (3) Equality

and Mutual Benefit; and (4) the Search for Common Progress.28 Later, in May 1988, President Raúl Alfonsín went to China and signed three cooperation agreements on aerospace,

animal health, and Antarctic research matters.

After the 1989–91 events (the Tiananmen Square massacre and then the collapse of communism in eastern Europe and Russia), the PRC’s domestic and international policies were

strongly affected at both a national and an international level. On the domestic front, these
while on the international front, the country had to face sanctions imposed by the W

This situation, and the simultaneous evolution of a unipolar world, encouraged Beiji

implement a campaign to overcome its strategic and diplomatic isolation.

High-level visits, which had become less frequent during those years, were restored. I

1990, President Yang Shangkun made an official visit to the Americas from north to 

The Chinese head of state visited Mexico, Brazil, Uruguay, Argentina, and Chile and 

the opportunity to underscore matters of common interest to both regions, such as o

tion to hegemonism, respect for the principle of nonintervention in domestic affairs 

other countries, and the establishment of a new international economic order. In No

ber of that same year, Argentine president Carlos S. Menem returned Yang’s visit and 

in Beijing for four days.

In 1993, Chinese foreign affairs minister Qian Qichen paid an official visit to Argenti

1994, the president of the People’s National Assembly, Qiao Shi, visited Argentina an

Brazil, and during his stay he once again expressed China’s solidarity regarding the es

lishment of a new international economic order. He also endorsed Argentina’s claim 

ereignty over the Malvinas Islands.29 Later, in 1995, the Argentine head of state paid h

second official visit to the PRC.

The Economic Dimension of Argentina-China Relations

China is the largest Asian buyer of Argentine goods.30 Economic relations betwee

two countries have developed impressively because of reciprocal interests. The re

ity with which the meetings of the Commission on Trade and Economic Cooper

were held illustrates the shared interest in dealing with different aspects of econo

cooperation and overcoming existing barriers.

Economic cooperation agreements have been gradually adapted to economic op

processes in Argentina and the PRC. These have allowed, among other aspects, th

of maritime transport, the establishment of binational Chinese-Argentine comp

and the reciprocal protection of investments. A considerable number of Chinese 

prises have permanent representations in Argentina, and vice versa. They mainly 

ate in areas such as oil operation, port infrastructure, and hydroelectric power

machinery. Chinese investment in Argentina has mainly focused on the chemica

tilizers), fishing, and electronics industries.

In the foreign trade sphere, Argentine exports to China have shown significant g

since 1992, increasing from US$130 million to US$870 million, especially during 

when sales to the PRC soared at a rate of over 110 percent. During that same per

Chinese imports into Argentina increased from US$480 million to US$1.1 billion
at around US$2.3 billion. In 2001, global trade with China, considering Asian-Pacific

countries, ranked second; if one considers only Argentine exports, then China become

Argentina’s main trading partner. The main products sold by Argentina to China include seeds and oleaginous fruit (32 percent of the total amount), fat, and animal and

vegetable oils (28 percent), furs and leathers (14.3 percent), and prepared pet food (7

percent). Argentina’s main imports from China are machinery, spare parts, and electronic devices and appliances (21 percent of total amount); boilers and mechanical devices (16 percent); toys (9 percent); and organic chemical products (8 percent).

President Kirchner’s June 2004 visit to Beijing aimed to further consolidate the growing trade relationship. Chinese and Argentine leaders agreed to expand cooperative efforts in the arenas of communications, sea transport, lumber processing, energy, and

raw materials in addition to the keystone field of agriculture. In 2003, Sino-Argentine

trade reached $3.18 billion, up an impressive 123 percent from 2002.31

Prospects for Future Argentine-PRC Relations

This analysis of Argentine-PRC relations suggests a historical continuum that, though

not long in duration, is developing successfully. This has manifested itself in everexpanding diplomatic, political, economic, and cultural relations between the two

countries.

Political ties, despite geographical and cultural distances, can be considered normal.

Gestures of friendship have formed a continuing characteristic of ties between Argentina and China. These gestures have translated into material aid measures, mutual respect, and sympathy for each other’s situation, such as China’s support of Argentina’s

position during the Malvinas conflict with Great Britain.

It is possible to believe that, in the international system built since the end of the Cold

War, political ties between Argentina and China could become even stronger. This may

come about by virtue of the transformation of power in the Asia-Pacific region from

the 1990s onward, which has meant, for some, a persistent loss of relative power (both

political and economic), and for China, a sustained growth in diplomatic, material, and

military strength.

China’s rise creates a special opportunity for Buenos Aires, especially at a time when

Argentina has been forced to diversify its political and economic relations internationally due to the difficulties and isolation it is undergoing. Regarding trade, it is important to recognize the low percentage of Argentine sales to China within the context of

Argentina’s exports to the rest of the world, as well as the fact that over 60 percent of

these sales are based on raw materials or have very little added value coming from four
aginous fruits; and minerals, slag, and ashes. Argentine imports from China have

soared during recent years, showing an increase of over 300 percent.

Argentine food products have greater advantages in the Chinese market because 

sumer needs in this area are significant. This can be attributed to a strong curren

toward adopting consumption patterns involving highly varied products and the

westernization of Chinese consumer culture. This is, in turn, reinforced by the st

of markets in the Asia-Pacific region (after the 1997 Asian crisis), and as a result 

a significant development of Argentina’s relations with that entire region is expe

take place in the years to come.

We must also consider the Asia-Pacific region’s interest in Argentina because of i

litical role in Latin America, as well as its rich human and natural resources. At t

same time, Buenos Aires must adopt a series of measures to make Argentina also 

nized for its seriousness, its respect for the so-called rules of the game, its respon

entrepreneurial practices, and its improved understanding of other cultures.

In brief, although political and economic contacts have been successful so far, evolut

“grand policy” level and expanded impact on broader Argentine society (outside gov

ment) have yet to materialize. This new century presents a challenge for public and p

sector decision makers from both parties. The continuation and fruitful developm

bilateral relations require a considerable amount of knowledge about each other’s re

tive national conditions, as well as creativity and courage to realize bilateral potential

Conclusion

Chinese activities in Latin America are neither large-scale nor threatening. Beijin

central goal in Latin America is to find new markets for its wide array of exports

well as to tap the region’s resources for China’s development. Enhanced relations 

states in Latin America are additionally intended to support China’s broader goa

multipolarization and to diplomatically isolate Taiwan. But there appears to be n

nese appetite for challenging the United States in what China regards as a U.S. sp

of strong influence. Other PRC goals in Latin America include gaining access to 

Western technology and business practices, supporting ethnic Chinese commun

while avoiding any associations with international criminal organizations, acquir

raw materials and foodstuffs, and improving its international image.

China is gradually returning to the international scene, having transformed itsel

genuine great power. This is a new element within the global order that deserves 

ful analysis. Emerging powers have many times in the past been aggressive and b

as they sought to achieve their “place in the sun.” Furthermore, they have mistru
adversaries.

The direction that Chinese civilization may adopt in this new century will have an important impact on the international system in the coming years. China will continue to

influence neighboring countries in Asia, but inevitably it will also seek to expand this

influence to the rest of the world as its economy grows.

As Robert D. Kaplan observes, future relations with China will entail the exercise of a

“realpolitik,” which should be unsentimental and based on a true scholarly understand

ing of its idiosyncrasies.32 Yet it would be extremely premature to react hysterically to

the rise of China.

Although in the past Beijing focused its utmost attention on relations with Washington

and Moscow, today China has built strong links to the rest of the international commu

nity. Latin America will be a part of that agenda. In the last decades, Chinese authorities have perceived that their neighboring countries were relatively stable and did not

offer significant strategic difficulties. Within this encouraging context, China has

started to develop sound political and economic ties with Latin American nations.

It is to be expected that the PRC will continue to prioritize its national security and de

velopment. Therefore, it will be especially alert to events pertaining to the United

States, Russia, and the affairs of East Asia generally. However, China will also pay atten

tion to those countries that can help develop its economy. Although there is a very low

probability of significant capital investment in the coming years, there is a significant

possibility of technology transfer in many areas. China’s trend toward diversifying

technology sources will foster trade with this region. Each side will also seek to work

with the other to complement their trade development policies and offset protectionist

measures taken in other important markets in Europe and North America.

From a national-security perspective, the most important areas to watch within contemporary PRC relations with Latin America include Sino-Brazilian aerospace cooperation, Chinese influence in the Panama Canal region, and Sino-Cuban military and

intelligence ties. While none of these issues represents a concrete threat to hemispheric

security in the forseeable future, this benign assessment could require modification as

Asia-Pacific security in the twenty-first century continues to evolve.
1. See David Shambaugh, Modernizing China’s

Military: Progress, Problems and Prospects

(London: University of California Press,

2002), pp. 125, 129.

2. Ying Ma, “China’s America Problem,” Policy

Review, no. 111 (February 2002), p. 2.

3. Sun Tzu, The Art of War (Madrid: Denma,

2001), pp. 44–47.

4. 2000 Annual Report on the Military Power of

the People’s Republic of China, Report to Congress Pursuant to the FY 2000 National Defense

Authorization Act (Washington, D.C.: U.S.

Department of Defense, 2000), pp. 5–6.

5. Yong Deng, “Hegemon on the Offensive: Chinese Perspectives on U.S. Global Strategy,”

Political Science Quarterly 116, no. 3 (Fall

2001), p. 355.

6. Ibid., p. 359.

7. Randall L. Schweller, “New Realistic Research

on Alliances,” American Political Science Review 91 (December 1997), p. 929.

8. Recognizing this problem, China recently unveiled a new initiative to redevelop the northeast. The challenge is daunting.

9. “China’s 21st Century Africa Policy Evolving,”

Stratfor.com, 7 August 2002.

10. Xin Zan and Bian Yi, “Ducaizhe Xuexiao”

(School for Autocrats), Guoji Zhanwang

(World Outlook), January 2002, pp. 80–83.

11. Hong Yuyi, Lamei Guoji Guanxi Shigang (A

Historical Survey of the International Relations of Latin America) (Beijing: Waiyu

Jiaoxue Yu Yanjiu Chubanshe, 1996), pp. 1,

502.

12. Data in this paragraph are drawn from

Geraldo Samor and Joel Millman, “Brazil

Seeks to Broaden China Trade,” Wall Street

Journal, 21 May 2004.

13. Data in this paragraph are from Todd Benson,

“China Fuels Brazil’s Dream of Being a Steel

Power,” New York Times, 21 May 2004.

14. Bernard D. Cole, Oil for the Lamps of China—

Beijing’s 21st Century Search for Energy,

McNair Paper No. 67 (Washington, D.C.: National Defense University, 2003), pp. 15–16.

15. See, for example, Adam Easton, “Venezuela

Backs China in Plane Row,” BBC News, 17

April 2001, available at news.bbc.co.uk/1/hi/

world/americas/1280995.stm.

ment of the Institute for Latin Americ

Studies, Chinese Social Sciences Acad

and secretary general of the Chinese A

tion for Latin American Studies (pres

to Ninth Financial and Banking Semi

the Perspectives of Political and Econ

Relations between the People’s Repub

China and Latin America, 11th plenar

sion, Buenos Aires, 1 April 1999).

17. Ko-Lin Chin, Smuggled Chinese: Clan

Immigration to the United States (Phil

phia: Temple University Press, 1999), 

18. Jennifer Bolz, “Chinese Organized Cr

Illegal Alien Trafficking: Human and 

modity,” Asian Affairs 22, no. 3 (Fall 9

147.

19. “The South American Banking System

pei Today 18, no. 2 (March–April 199

20. “Challenges to Security and Crimes o

XXI Century,” Proceedings of the XIV 

Seminar (Buenos Aires: Escuela Super

Gendarmería, 1996), pp 13–16.

21. “Alleged Mafia Lord to Be Indicted fo

Evasion,” ABC (Paraguay), 17 Septem

2001.

22. “Chinese Origin Residents Detained a

Questioned Regarding Possible Link t

fia,” Noticias (Paraguay), 26 October 

23. Roberto Godoy, “Triple Border Area 

tored during the Past 20 Years,” O Est

São Paolo, 11 November 2001.

24. “Russia Warily Finesses China Ties,”

Stratfor.com, 24 July 2002, available a

www.cdi.org/russia/216-10.cfm. This 

contends that these rumors are intend

Moscow to fuel Sino-American antag

which Russia may view as consistent w

national interests.

25. See, for example, “China Provides Cu

Logistic Items, Not Arms,” 14 June 20

available at www.intellnet.org/resourc

pacom_ep3_homepage/eng/.

26. Dale Eisman, “Realignment of Navy S

Likely to Affect Bases in Pacific Regio

folk Virginian-Pilot, 25 June 2003.

27. Li He, Sino-Latin American Economic R

(New York: Praeger, 1991), pp. 53–54.

28. “Premier Zhao Announces the Four P

ples for Sino-Latin American Relation

Beijing Informa, no. 46 (November 198
Latin America,” Renmin Ribao, 17 November

1994, p. 2.

30. The literature employed to assess this subject

comes from interviews and statistics graciously provided by the deactivated Analysis

Unit for Asian-Pacific Matters of the Ministry

of Economy and by the International

the Argentine Foreign Affairs Ministry.

31. “Huge Potential in Argentina-China Trade,”

Xinhua, 29 June 2004, available at china.org.cn/

english/international/99642.htm.

32. Robert D. Kaplan, “China: A World Power

Again,” Atlantic Monthly 284, no. 2 (August

1999), pp. 16–18.
Conclusion

Read together, the three studies included in this volume paint a picture of real an

mediate threats to the security interests of Latin American countries and the Un

States. They suggest, at least implicitly, that countries north and south of the Rio

Grande have much to gain from working together to meet those challenges. Even 

sory review of the current dynamic in the Western Hemisphere could lead to a co

sion that not enough dialogue on security is taking place, much less the kind of

concerted action required to address the threats. A review of some of the main fi

included in the preceding chapters may both offer an explanation for what is wro

with this picture and suggest a way forward.

In their analysis of “new threats” in Latin America’s lawless areas and failed state

Cirino, Elizondo, and Wawro conclude that the terrorist menace breeds in the slu

and ungoverned areas of Latin America. It is inseparable from the economic, soc

and political problems of the region. Terrorist basing is possible in all of the vict

accomplice states, as well as in the “lawless areas” described in their chapter. The

gest a two-tracked approach to addressing the security threats they identify. First

effort must be made to penetrate, expose, and destroy terrorist cells, and their lin

drug production and sales. Further, the authors advocate a “kind of subtle nation

building” aimed at eliminating the conditions that support terrorists and narcos, 

well as fervently anti-American “populist movements.” While ascribing high salie

a terrorist threat in Latin America, they explicitly conclude that Islamic terrorism 

minor concern for the region.

In a complementary analysis, Taylor looks specifically at recent poor economic p

mance in the major economies of Latin America and finds adverse security cons

quences flowing from the short-term economic situation. Even though a sluggish

world economy was a major contributor to poor growth rates in Latin America a

beginning of this decade, publics in the region understandably associated their d

with their own democratically elected governments and the market-oriented pol
mocracy erodes the potential for stable, responsive government that promises a new

era of social peace. At the same time, in several countries, rising crime rates and civil

unrest flowed directly from economic hardship. The potential for international or domestic terrorists to exploit this situation echoes the conclusions of the first chapter. To

the extent that Latin Americans saw the United States as responsible for their economi

plight, either because it was preoccupied with wars in Afghanistan and Iraq or because

it was identified with the unpopular policy reforms associated with the Washington

Consensus, relations with the United States were harmed and security cooperation was

complicated. Looking beyond the short term, Taylor also sees security problems emanating from the highly inequitable distribution of income prevalent in Latin America.

As with short-term economic distress, one finds a high correlation between this form of

economic injustice and lack of support for democracy and heightened rates of crime.

The chapter by Delamer, Goldstein, Malena, and Porn has a different point of departure from the first two: it asks whether the rising power of China, an external state,

poses an emerging threat in the Latin American region. The authors identify three security issues of concern. The first relates to the presence of the Panama Ports Company, a subsidiary of the Hong Kong–based company Hutchison Whampoa Limited,

to operate access ports on either end of the Panama Canal. Their examination of the

evidence leads them to a tentative conclusion that this investment is unlikely to become a decisive factor in any U.S.-China maritime conflict scenario. The other security issues they address relate to the foci of the other two chapters in this volume:

“triads” and illegal immigration. The activities of the “triads,” tightly structured organizations for carrying out transnational crime, include money laundering and illegal

immigration. While currently aimed at resettling Chinese nationals abroad, this immigration network might be exploited by international terrorist groups with a political/

military agenda.

Can we see any pattern in the nature of the security threats treated in this volume?

First, one can be identified as sui generis: the Hutchison Whampoa investments at the

Atlantic and Pacific ends of the Panama Canal. Although the researchers who evaluate

that phenomenon downplay its security significance, had it been deemed to pose a seri

ous threat, it could have been categorized as a threat from a foreign state, given the relationship between the Chinese government and investors based in China.

All the other threats included in the three essays share certain characteristics. Whether

they are domestic or transnational, the significant actors are not states. They do not resemble military threats in their equipment, technology, or force structure; nor are
ters may include a military component. More often, what is needed is a combina

law enforcement and intelligence operations to address the symptoms, and econ

and social programs to meet the underlying causes of the threats.

The authors recognize that the selection of topics for the chapters in this volume 

not include all the important security issues in the Americas today. They are con

though, that the present topics are among the most important, even in countries 

Latin America that have not been singled out for extensive treatment here. The m

notable omission is full attention to the narco-terrorist threat in Colombia.1

One can be heartened by the realization that the problems treated here as securit

threats are widely perceived as such. Indeed, the Declaration on Security in the Am

cas, adopted by the Special Conference on Security of the Organization of Ameri

States in October 2003 in Mexico City, included a reference to all of them, plus s

others:

The security of states of the hemisphere is affected, in different ways, by the traditional threats 

following new threats, concerns, and other challenges of a diverse nature:

• Terrorism, transnational organized crime, the global drug problem, corruption, asset lau

ing, illicit trafficking in weapons, and the connections among them.

• Extreme poverty and social exclusion of broad sectors of the population, which also affe

bility and democracy. Extreme poverty erodes social cohesion and undermines the secu

states.

• Natural and man-made disasters, HIV/AIDS and other diseases, other health risks, and 

mental degradation.

• Trafficking in persons.

• Attacks to cyber security.

• The potential for damage in the event of an accident or incident during the maritime tr

of potentially hazardous materials, including petroleum and radioactive materials and t

waste.

• The possibility of terrorist access, possession, and use of weapons of mass destruction a

means of delivery.

2

What the Declaration on Security masked, though, in its catchall statement of the 

matic consensus that was possible in Mexico City was the different emphases giv

different countries of the Americas to specific threats. But for this factor, it ough

easy to reach agreement on working together, north and south, on solutions. In f

review of statements by leaders of the major countries in North and South Amer
threats (see table 1).

Achieving a shared threat assessment is key to cooperation, because if countries do not

share a common perception of a threat, it will be difficult at best for them to work together to meet it. Thus, in the most prominent recent case of action to counter a putative state threat, the governments of Mexico and Chile were unwilling as members of

the UN Security Council to support the position of the United States that another resolution should be passed to authorize the use of force against Iraq. At the other end of

the spectrum arrayed above, the threat of domestic violence does not pose the same

challenge to the government of the United States as, say, urban challenges may in Brazi

or ethnic unrest in Peru, Bolivia, or Ecuador.

There seems, though, to be more consensus between Washington and Latin American

capitals on terrorism and economic challenges. Certainly in Colombia, the narco-terrorist nexus presents a clear danger to Colombian stability and institutions, while the

narcotics it produces endanger public health in the United States. To the extent that

foreign terrorists aid and abet their Colombian counterparts, the shared threat perception is strengthened further. The U.S. trade representative, Robert B. Zoellick, has often

made the case that freer trade, by leading to greater prosperity and closer ties among

trading countries, promotes security.

3

If it were possible to craft the modest consensus on the highlighted items in table 1

into a sort of grand bargain on hemispheric security and economic progress, Latin

American countries and the United States might find it easier to cooperate to satisfy

their security objectives. One of the biggest challenges, oddly enough, may be bureaucratic barriers within governments. Since September 11, we have gained a new appreciation of the difficulty of forging cooperation among agencies responsible for one

aspect or another of national security. The kind of comprehensive approach called for

here requires communication and cooperation not only among the broad range of

UNITED STATES LATIN AMERICA*

State-to-State Threat Moderate Low

International Terrorist Threat High Moderate

Threat to Economic Security Moderate High

Threat of Domestic Violence Low Moderate

TABLE 1

Intensities of Governments’ Perceptions of Threats

*Cuba and Venezuela are excluded here because statements by Fidel Castro and Hugo Chávez indicate that they

perceive a moderate-to-high state threat to their countries’ security.
and commercial policy.

Difficult as implementing this program may be, it could be the best way available 

the high degree of engagement among the governments of the Americas that is r

quired to improve security throughout the hemisphere.
1. An important contribution to understanding

the conflict in Colombia is available in a recent series of monographs published by the

Strategic Studies Institute of the U.S. Army

War College.

2. Organization of American States, Declaration

on Security in the Americas (Mexico City,

tober 27–28, 2003), p. 4.

3. See, e.g., Office of the U.S. Trade Representative, Identification of Trade Expansion Priorities Pursuant to Executive Order 13116, Apri

30, 2001.
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2004.

Washington Times, 12 September 2002–29 

ber 2003.

TELEVISION AND ELECTRONIC N

SOURCES

ABC Color (Paraguay), 17 September 2001

uary 2003.

Agence France Presse (Paris), 1 May 2003.

Agencia Centroamericana de Noticias (Panam

January–25 April 2003.

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Bogotá El Tiempo (Colombia).

Brasilia Correio Braziliense, 2 February 200

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El Correo (Lima), 2 May 2003.

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Madrid EFE, 4 May 2003.

Movimientobolivariano.org.

Noticias (Paraguay), 26 October 2001.

Pagina 12 (Argentina), 26 January–7 May 

São Paolo Gazeta Mercantil, 5 May 2003.

Stratfor, 19 September 2001–4 September 2

ACANEFE (Panama), 23 January–25 April 

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Zmag.org, 14 July 2002.

Abbreviations

AUC United Self-defenses of Colombia

CCP Chinese Communist Party

CNP Comprehensive National Power

CNWS Center for Naval Warfare Studies of the

U.S. Naval War College

CSIS Center for Strategic and International Studies

ECLAC Economic Commission for Latin America and the

Caribbean of the United Nations

ELN Army of National Liberation (Colombia)

ELN-B Bolivian Army of National Liberation

FALG Foreign Affairs Leadership Group

FARC Revolutionary Armed Forces of Colombia

FBL Bolivian Liberation Forces

FDI Foreign Direct Investment

FTAA Free Trade Area of the Americas

GDP Gross Domestic Product

IDB Inter-American Development Bank

ILEA Institute for Latin American Studies, a member of the

Chinese Social Sciences Academy

IMF International Monetary Fund

NATO North Atlantic Treaty Organization

OAS Organization of American States

OECD Organization for Economic Cooperation and Developm

PLA People’s Liberation Army
PPC Panama Port Company

PRC People’s Republic of China

SARS Severe Acute Respiratory Syndrome

SIVAM Amazon Region Surveillance System

UNHRC United Nations Human Rights Commission

WTO World Trade Organization
Contributors

Julio A. Cirino is president of the Center for Hemispheric Studies Alexis de Tocq

and a specialist in hemispheric security, defense, and international relations. He 

director of the Center for Conflict Studies of the University of Chile. Previously 

positions as adviser in the policy and strategy directorate of the Argentine Minis

Defense and counselor in the Embassy of Argentina in Washington. He is a mem

the International Institute of Strategic Studies in London, a correspondent of Lib

Digital of Madrid and Radio Marti, Miami, and an analyst of defense and securit

fairs for CNN en español.

Alberto R. Coll is chair of the Strategic Research Department and former Dean 

Naval Warfare Studies at the U.S. Naval War College. He holds a B.A. from Prin

University and a J.D. and Ph.D. from the University of Virginia. From 1990 to 19

served as a Principal Deputy Assistant Secretary of Defense. He is the author of T

Wisdom of Statecraft and has written widely on Latin American issues. This year 

ceived Guatemala’s Jose Antonio Irisarri Medal for his contributions to strengthe

the rule of law, democratization, and civilian control of the military in that coun

Dr. Coll is a member of the Council on Foreign Relations, the Virginia Bar, and t

American Civil Liberties Union, and is a visiting professor at the Watson Institut

Brown University.

Guillermo R. Delamer is a member of the board of directors of the Center for He

spheric Studies Alexis de Tocqueville, a private research institute, and a councillor a

Center for Strategic Studies of the Argentine Navy. He retired from the Argentine Na

rear admiral after a career aboard several types of surface ships that included three co

mands at sea. He is a graduate of the Naval Command College of the U.S. Naval 

College and holds a master of science degree in management from Salve Regina Univ

Silvana L. Elizondo is a director of the Center for Hemispheric Studies Alexis de

Tocqueville and professor of history at the Belgrano University, Buenos Aires. Ho

of a master’s degree in international relations from Belgrano University, she also

worked in defense and security studies at the Universidad del Salvador, Buenos A

and as institutional secretary of the Fundación Integración. She is a columnist an

tor of Agenda Internacional.

Lyle J. Goldstein is associate professor of strategic studies and vice-director of the 

asia Study Group at the U.S. Naval War College. He holds a B.A. from Harvard
Hopkins University, and a Ph.D. from Princeton University. He has worked in the Office of the Secretary of Defense and at the Brookings Institution. He has lived and conducted extensive research in Russia and China and speaks both their languages fluently

His first book, Preventive Attack and Weapons of Mass Destruction: A Comparative Historical Survey, will be published by Stanford University Press in 2005.

Jorge Eduardo Malena teaches international relations and oriental studies at the Catholic University, Buenos Aires, and is an associate of the Center for Hemispheric Studies

Alexis de Tocqueville and the Center for Strategic Studies of the Argentine Navy. He

holds a bachelor’s degree in political science and a master’s degree in international rela

tions from the Catholic University, Buenos Aires. He also earned a master of arts degree in Chinese area studies from the School of Oriental and African Studies of the

University of London and is currently a Ph.D. candidate at the Catholic University,

Buenos Aires.

Gabriela E. Porn serves as a research fellow at the Center for Hemispheric Studies

Alexis de Tocqueville, a junior researcher at the Center for Strategic Studies of the Argentine Navy, and an analyst at the Argentine-Indian Chamber of Industry and Commerce. She is a graduate in political science of the Catholic University, Cordoba, and

holds a master’s degree in international relations from Belgrano University, Buenos Aires

Paul D. Taylor is senior strategic researcher at the U.S. Naval War College, where he also

teaches electives on Latin America and international economics and chaired the Latin

American Studies Group. He holds an AB degree, magna cum laude, from Princeton

University and a master’s degree from Harvard University, where he studied economics

A former career Foreign Service officer, he served as U.S. ambassador to the Dominican

Republic and deputy assistant secretary of state for Inter-American Affairs, and had

four Latin American posts in which he lived and worked for periods of two to four

years each. Before joining the Foreign Service, he served at sea as a naval officer.

Geoffrey Wawro is professor of strategic studies at the U.S. Naval War College. He holds

a B.A., magna cum laude, from Brown University and a Ph.D. from Yale University. His

books include The Austro-Prussian War (1996), Warfare and Society in Europe, 1792–

1914 (2000), and The Franco-Prussian War (2003), and he is North American editor of

the Cambridge Military Histories. Wawro’s scholarly articles and op-eds have been published in numerous academic journals and newspapers. He has appeared as a military

analyst on Fox News Channel and is host and anchor of the History Channel’s Hard

Target, a weekly talk show with leading historians, statesmen, politicians, and

journalists.
Collaborating Organizations

CENTER FOR NAVAL WARFARE STUDIES, U.S. NAVAL WAR COLLEGE

In 1981, almost a century after Stephen B. Luce founded the Naval War College a

place of original research on all questions relating to war and to statesmanship c

nected with war, or the prevention of war,” the Center for Naval Warfare Studies 

established within the College as a nexus for broadly based, advanced research on 

naval contribution to national strategy. The Center directly complements the cur

lum of the Naval War College by providing a place for researching important pro

sional issues which, in turn, inform and stimulate the faculty and students in the

classroom. From its very beginning, the Center has linked the Naval War College 

fleet and policy makers in Washington by serving as a focal point, stimulus, and 

source of strategic and campaign thought, by integrating strategic, campaign, an

tical concepts, by linking strategic concerns with technological developments, an

nally, by testing and evaluating concepts through war gaming.

Under the leadership and direction of the Dean of Naval Warfare Studies, a full-t

government-funded research staff works in six departments: Strategic Research, 

Gaming, Advanced Research, Warfare Analysis and Research, Oceans Law and Po

and the Naval War College Press, as well as a detachment of the Office of Naval

Intelligence.

CENTER FOR STRATEGIC STUDIES OF THE ARGENTINE NAVY

The objective of the Center for Strategic Studies of the Argentine Navy is to cons

a center of studies and research aimed at expanding and deepening strategic und

standing of national and international naval, maritime, and military issues in ord

support decision making at the highest level of the Navy of Argentina. As part of 

program, the Center also makes available to the broader society strategic analyse

national and international subjects related, especially, to maritime affairs.

The Center for Strategic Studies of the Argentine Navy, as an academic entity wh

primary function is the analysis of national and international issues with special 

phasis on military and maritime questions, works within the principle of academ

freedom. While the Center is a direct dependency of the Office of the Argentine 

of Naval Operations and advises that organization, its work and opinions do not 

sarily reflect the position or views of the Argentine Navy.
The Center for Hemispheric Studies Alexis de Tocqueville is a private, nonaffiliated

organization dedicated to the production of strategic analyses and action proposals

with the intention of promoting better integration of the hemisphere. Headquartered

in Buenos Aires, the Center’s activities are concentrated on a mission to promote the

generation of ideas that aim to create a set of strategic guidelines for countries of the

region within an environment of deep political and philosophical consensus. This consensus must take into consideration key issues such as the consolidation of democracy,

a common search for a hemispheric security framework, improvement in economic re

lationships, management and containment of social conflict, and the upholding of human rights.

The Center’s programs are dedicated to exchanging and spreading ideas through the

media, organization of open forums, and seminars in educational institutions, always

promoting the involvement of students in research projects and conferences.

LATIN AMERICAN STUDIES GROUP OF THE U.S. NAVAL WAR COLLEGE

The Latin American Studies Group supports the Navy, the U.S. Southern Command,

and other elements of the U.S. Government in the formulation and execution of programs and policy by providing strategic academic and research partnerships through

the region. It joins those members of the teaching and research faculty and staff of the

Naval War College, and interested students, who are engaged in scholarly topical work

related to the Americas. Many of its members have lived, studied, or served in the region. Among the activities of the Latin American Studies Group are collaborative research on regional security issues, international war games, and an active program of

lectures and seminars by Naval War College faculty in naval war colleges and other institutions in Latin America and the Caribbean.
Titles in the Series

“Are We Beasts?” Churchill and the Moral Question of World War II “Area Bombing

Christopher C. Harmon (December 1991).

Toward a Pax Universalis: A Historical Critique of the National Military Strategy f

1990s, by Lieutenant Colonel Gary W. Anderson, U.S. Marine Corps (April 1992

The “New” Law of the Sea and the Law of Armed Conflict at Sea, by Horace B. Robe

Jr. (October 1992).

Global War Game: The First Five Years, by Bud Hay and Bob Gile (June 1993).

Beyond Mahan: A Proposal for a U.S. Naval Strategy in the Twenty-First Century, b

Colonel Gary W. Anderson, U.S. Marine Corps (August 1993).

The Burden of Trafalgar: Decisive Battle and Naval Strategic Expectations on the E

the First World War, by Jan S. Breemer (October 1993).

Mission in the East: The Building of an Army in a Democracy in the New German S

by Colonel Mark E. Victorson, U.S. Army (June 1994).

Physics and Metaphysics of Deterrence: The British Approach, by Myron A. Greenb

(December 1994).

A Doctrine Reader: The Navies of the United States, Great Britain, France, Italy, an

Spain, by James J. Tritten and Vice Admiral Luigi Donolo, Italian Navy (Retired)

(December 1995).

Chaos Theory: The Essentials for Military Applications, by Major Glenn E. James, 

Air Force (October 1996).

The International Legal Ramifications of United States Counter-Proliferation Strat

Problems and Prospects, by Frank Gibson Goldman (April 1997).

What Color Helmet? Reforming Security Council Peacekeeping Mandates, by Myro

Nordquist (August 1997).

Sailing New Seas, by Admiral J. Paul Reason, U.S. Navy, Commander-in-Chief, U

Atlantic Fleet, with David G. Freymann (March 1998).

Theater Ballistic Missile Defense from the Sea: Issues for the Maritime Component 

mander, by Commander Charles C. Swicker, U.S. Navy (August 1998).

International Law and Naval War: The Effect of Marine Safety and Pollution Conv

during International Armed Conflict, by Dr. Sonja Ann Jozef Boelaert-Suominen

(December 2000).
marines, by Owen R. Cote, Jr. (2003).

The Limits of Transformation: Officer Attitudes toward the Revolution in Military Affairs

by Thomas G. Mahnken and James R. FitzSimonds (2003).

Military Transformation and the Defense Industry after Next: The Defense Industrial

Implications of Network-Centric Warfare, by Peter J. Dombrowski, Eugene Gholz, and

Andrew L. Ross (2003).

The Evolution of the U.S. Navy’s Maritime Strategy, 1977–1986, by John B. Hattendorf

(2004).

Global War Game: Second Series, 1984–1988, by Robert H. Gile (2004).