Fresh Look Reviews

Fresh, unique perspectives on recent books from across the hemisphere originally published in English, Spanish and Portuguese.

In this issue:
Photo: Lars Klove

The Washington Dissensus

Eric Farnsworth

Book Review: The Washington Dissensus: A Privileged Observer’s Perspective on U.S.-Brazil Relations, by Rubens Barbosa.

Brazil is little understood or appreciated in the United States. The lack of knowledge about the world’s seventh largest economy—and the second largest democracy in the Western Hemisphere—is particularly evident in Washington beyond a small circle of “Brazil hands.” When the subject of Brazil comes up at all in Beltway policy circles, it is usually discussed in the context of a nonthreatening friend who shares a worldview and interests similar to the U.S., along with a persistent wish to see Brazil play an even greater role in international affairs, and as a moderating influence across the region.

But Brazil, as Rubens Barbosa makes clear in The Washington Dissensus, has a different view—both of its own role in regional and global affairs, and its relationship with the United States. Barbosa, who capped a distinguished 40-year career in Brazil’s foreign service with a stint as ambassador to Washington from June 1999 to April 2004, traces the evolution of his country’s diplomacy toward the U.S. from what he describes as the traditional, work-within-the-system approach of President Fernando Henrique Cardoso’s administration to the more strident diplomacy pursued by the Luiz Inácio Lula da Silva government.

Barbosa, now retired from government and freer to speak his mind, is generally critical of the change in Brazil’s foreign policy priorities. This makes his account even more compelling to U.S. policymakers who may regard Brazil with blinkered eyes. He writes, “U.S. policy toward Brazil is still based on blurred visions, myths, stereotypes, and distortions of reality.”

What makes Barbosa’s book especially authoritative is that he was on the inside during a pivotal period in the bilateral relationship. During his tenure, Barbosa was a key interlocutor for the governments of both Cardoso and Lula—a period that spanned the 9/11 attacks, the beginning of wars in Afghanistan and Iraq, the Quebec City Summit of the Americas, and the cratering of negotiations for a Free Trade Area of the Americas, among other events—all of which he discusses in his book.

Moving effortlessly between discussions of policy and grand national strategy to tactics and the day-to-day role-playing of an ambassador, Barbosa reviews the tectonic political shifts occurring in each nation and how they impacted the bilateral relationship, while detailing his efforts to operate effectively as Brazil’s top representative in Washington. The high point for him was clearly the period when President Bill Clinton and Cardoso’s administrations overlapped, after which the “tone and content of the bilateral relationship would never be the same again,” and when “fundamental differences” were “resolved without much ado.” The advent of the George W. Bush administration in 2001 and Lula’s administration in 2003 recast the bilateral relationship. Despite the genuine personal relationship that the two leaders shared, Brazil’s shifting foreign policy priorities, coupled with Washington’s lack of regional focus and understanding, led to a hardened and divergent policy environment. As ambassador, Barbosa writes, he was unimpressed with the level of knowledge about Brazil he encountered in the capital (including among other members of the Latin American diplomatic community).

Much of the book focuses on the handful of meetings that occurred between the respective presidents. This reveals—perhaps unintentionally—Brazil’s limitations in its approaches to Washington. Unlike other Latin American countries, Brazil tends to focus primarily on official diplomatic channels, thus neglecting or downplaying the many informal channels of influence and access that Washington famously provides. For example, Barbosa is dismissive of the role of the private sector as a pressure point in advancing the bilateral agenda, calling the U.S. private sector “ignorant” of Brazilian realities. He also appears to overlook the importance of direct, consistent engagement with Congress beyond the largely symbolic role of the Brazil caucus.

The book might also have benefited from a stronger editor. The title is a too-clever effort to separate Brazilian policy from the clichéd “Washington Consensus,” but in English, the term “dissensus”—which he uses “to describe the many divergences between the United States and Brazil in particular, and Latin America in general”—is virtually unknown. The book also suffers in places from needless repetition, and the overall tone is tainted by unnecessary personal attacks against a number of U.S. officials who served contemporaneously. More seriously, it includes several factual errors that mar the overall impression and may mislead the reader. To highlight one of several: Louisiana Congressman Bill Jefferson, who was convicted of public corruption in 2009, was a Democrat, not a Republican. This is an important fact because Jefferson was one of only a handful of protrade Democrats, and his 2008 defeat (while he was under indictment) set back efforts to expand the hemispheric trade agenda.

Nonetheless, Barbosa’s book offers valuable insights into Brazilian foreign policy toward the United States. He is especially critical of the overt politicization of Brazil’s foreign policy under the Partido dos Trabahaldores (Workers’ Party—PT). Tellingly, he quotes a 2010 PT congressional document: “Objectively, the foreign policy of the Lula government sees Brazil as competing with the United States” and of “immense geopolitical importance,” with the “potential to become a threat to the U.S. over the medium term.”

This is not the benign view of regional and global partnership that most U.S. policymakers have today toward Brazil, and Barbosa’s interpretation helps to explain several significant misunderstandings between Washington and Brasília in recent years. For example, he writes that Brazil’s effort to build a “strategic” partnership with Iran was a “grave error” that set back bilateral relations significantly and severely damaged Brazil’s standing in influential circles in Washington. He also believes that Brazilian efforts to apply an “inverted version of the Monroe Doctrine”—working to exclude the U.S. from the hemisphere while enfeebling the Organization of American States—among other actions, has contributed to “unnecessary attrition with Washington.”

His bias is clear: “I am convinced that our most important bilateral relationship remains the one we share with the United States. Views that contend otherwise belong to the domain of rhetoric and prevent us from maximizing the benefits Brazil could draw from a solid relationship with this country.” I share these views, and Barbosa’s important insights can helpfully inform those both inside and outside Washington who seek to engage with Brazil, as well as those who simply seek to know more about this fascinating and glorious, yet often diplomatically frustrating, country. With books like The Washington Dissensus, we can begin to address the very real and lamentable deficit of understanding and appreciation of Brazil that even now continues to exist within the United States.

Democracies and Dictatorships in Latin America

Miriam Kornblith

Book Review: Democracies and Dictatorships in Latin America: Emergence, Survival, and Fall, by Scott Mainwaring and Aníbal Pérez-Liñán.

Latin America experienced a dramatic political change in the last quarter of the twentieth century. At the onset of the so-called “third wave” of democracy in 1978, the only democratic regimes were Costa Rica, Colombia and Venezuela. But by 1995, all the countries in the region, with the notable exception of Cuba, were democracies or semi-democracies. The breadth, speed and endurance of the transition marked a significant break with Latin America’s past. Nevertheless, in the post–third wave period, beginning in 1995 and continuing to the present, the region has experienced mixed processes of democratic deepening, stagnation and decay.

In Democracies and Dictatorships in Latin America: Emergence, Survival, and Fall, Scott Mainwaring and Aníbal Pérez-Liñán explore the reasons for the varied outcomes. Their book is an ambitious attempt to explain the broad historical trends toward and away from democracy by focusing on political variables—including the radicalism or moderation of political actors, their preferences for democracy or dictatorship, and international actors and influences. They argue that these political variables contribute more to an understanding of regime change than structural variables, such as class structure or economic performance—variables that have dominated many theoretical analyses to date. The study summarizes more than a decade of collaborative scholarship between Mainwaring—the Eugene and Helen Conley professor of political science and former director of the Helen Kellogg Institute for International Relations at the University of Notre Dame—and Pérez-Liñán, an associate professor of political science and a faculty member of the Center of Latin American Studies at the University of Pittsburgh.

Mainwaring and Pérez-Liñán have made a significant contribution to the wealth of scholarship on democratization with a coherent framework for understanding regime change in Latin America from 1900 through 2010. Their book masterfully combines deep knowledge of the theoretical and empirical literature with consistent and nuanced use of qualitative and quantitative methods to support their assertions and to generate relevant data and statistical analysis.

The fresh perspective offered by Democracies and Dictatorships in Latin America to the study of democratization and regime change will greatly contribute to the re-examination of accepted truths. The authors develop an actor-based theoretical framework that uses political regimes as a dependent variable. They code the administrations of 20 Latin American countries from 1900 to 2010 based on a trichotomous classification as either democratic, semi-democratic or authoritarian. The independent variables are the actors’ radical or moderate policy preferences; actors’ normative preferences about democracy and dictatorship; and international actors and influences. Mainwaring and Pérez-Liñán hypothesize that radical actors increase the risk of breakdown of a competitive regime (for example, Augusto Pinochet’s military coup, which overthrew democratically elected Chilean President Salvador Allende in 1973, and Alberto Fujimori’s presidential coup in Peru in 1992), whereas policy moderation facilitates the survival of competitive regimes.  Another hypothesis argues that a normative commitment to an authoritarian regime among key political actors reduces the probability of a democratic transition, while a normative commitment to democracy reduces the likelihood of breakdown. Strong international support for democracy may also increase the probability of democratic transitions and reduce the risk of breakdowns.

Mainwaring and Pérez-Liñán conduct meticulous tests and develop systematic indicators for their dependent and independent variables based on sound theoretical, historical and methodological assumptions. To identify the actors’ policy and normative preferences, a team of 19 research assistants, guided by a 20-page coding document, segmented the history of each country according to presidential administrations. For 290 administrations, they created a database of 1,460 actors, including 573 parties, coalitions and factions; 327 presidents; 175 militaries and military factions; and dozens of organizations representing businesses, guerrilla and paramilitary groups, civil society, labor unions, churches, and social movements, as well as powerful individuals and additional actors.

This impressive analysis enabled the authors to conclude that in the 1980s, “radical actors became less common and less powerful, and moderation became the tone of the day in most of Latin America,” and that “after 1978, more actors were committed to democracy, and far fewer normatively embraced the ideals of a revolutionary ‘dictatorship of the proletariat’ or a right–wing dictatorship.”

Through the examination of the international and regional arenas, they concluded that “the hemispheric political environment became more hospitable to democracy. ” When associated with the regime changes that occurred in the 20 countries under examination, these findings provide strong explanations for the early prevalence of authoritarian regimes and for the region’s shift toward democracy beginning in 1978.

The authors contrast their hypothesis with alternative explanations based on structural variables—for example, the influential modernization theory, which broadly establishes that the level of modernization has a major impact on the likelihood of democratization. They also weigh their findings against other relevant theories based on class structure, resource dependence, a regime’s economic performance, mass culture theory, and the strength of formal institutions.

The authors convincingly argue that their approach offers a more nuanced explanation than alternative theories of regime change. “We do not claim that the modernization theory is wrong,” they write. “But the relationship between the level of development and democracy has been far from determinate in Latin America until a high level of development makes radicalization unlikely.”

The book includes a chapter on the post–third wave period, which began in 1995. The authors’ analysis and conclusions about regime change during this era are tentative, but nonetheless relevant. Their emphasis on basic regime types and major episodes of regime change (transitions and breakdowns) prevented them from analyzing transformations within competitive regimes—that is, explaining the differing country trajectories of democratic deepening, stagnation or erosion in the post–third wave period—but their three independent variables (actors’ radicalism or moderation, actors’ preferences for democracy or dictatorship, and international actors and influences) are persuasive explanations of these different patterns. Their conclusion that reversion to authoritarianism is likely when the three variables negatively evolve has unfortunately been demonstrated by the continued democratic decay in Venezuela, Nicaragua, Ecuador, and Bolivia. In those countries, elected officials enact radical and polarizing policies that have flagrantly violated the main principles of democracy—in particular, respect for civil and political rights and truly competitive electoral processes.

Despite the genuine reasons to praise democratization in many Latin American countries, it may be time to overcome complacency and focus on detecting and halting a troublesome trend toward democratic deterioration. This book offers consistent and innovative insights into the region’s democracies that will inspire both satisfaction at their accomplishments, and concern about their future.

The Caribbean's Fiscal and Economic Challenges

Kelli Bissett-Tom

Book Reviews: Caribbean Renewal: Tackling Fiscal and Debt Challenges, by Charles Amo-Yartey and Therese Turner-Jones;
The Eastern Caribbean Economic and Currency Union: Macroeconomics and Financial Systems, by Alfred Schipke, Aliona Cebotari and Nita Thacker

Pack your bags. The vacation is over. This was the panorama of the Caribbean in 2008 and 2009, when the Great Recession emptied the islands’ beaches of tourists and dried up foreign direct investment for hotels, condos and restaurants. Current account and fiscal deficits widened in many of the Caribbean nations, and belt-tightening was the rule in households as well as governments. In some cases, the economic crisis added to government debt already accumulated from bailing out weak banks and the efforts to aid collapsing sugar and banana industries since the 1990s.  According to the Caribbean Development Bank, the region’s five most indebted governments—Antigua and Barbuda, Barbados, Grenada, Jamaica, and St. Kitts and Nevis—had public debt reaching between 85 percent and 140 percent of GDP at the end of 2014. For some countries, the trickle of tourism dollars and euros coming in now is barely sufficient to finance imports or to service external debt contracted in better times.

What can be done? The IMF has published two authoritative volumes on the Caribbean’s principal fiscal and economic challenges. Both, edited by veteran analysts of the IMF’s Western Hemisphere Department, present a thoughtful comparative analysis.

Caribbean Renewal: Tackling Fiscal and Debt Challenges amounts to a fiscal policy handbook, with examples of effective debt reduction strategies used since 1970. Edited by Charles Amo-Yartey, a senior economist in the Caribbean II Division, and Therese Turner-Jones, former deputy chief of the same division, the book’s premise is based on the consensus that the region’s high debt levels must be reduced.  As the editors point out, a large debt burden increases a country’s vulnerability to economic shocks, incurs high interest costs, detracts from other spending priorities such as infrastructure, and can raise refinancing risks if maturities are poorly structured.

In a key chapter, Amo-Yartey and fellow IMF economist Joel Chiedu Okwuokei highlight several ways governments can reduce their debt, including consolidating public finances (for example, cutting budgets and eliminating off-budget spending); eroding the value of local currency debt through inflation; privatizing state-owned corporations or utilities; or restructuring or defaulting on debt. Robust economic expansion, which enables countries to grow faster than their debt, is another alternative. But, as Amo-Yartey and Okwuokei emphasize, “Since growth in the current environment is virtually nonexistent, significant fiscal consolidation [in the Caribbean] is inevitable.”

All the prescriptions present formidable challenges. Many Caribbean countries have fixed or rigid foreign exchange regimes, precluding central banks from inflating away government debt without risking a currency crisis. Moreover, the authors note that while privatizing state-owned enterprises reduces debt, it can do so at the expense of losing a productive asset. Additionally, selling utilities or other state-owned companies is politically unpalatable in most Caribbean countries, where powerful unions can block privatization proposals.

And fiscal consolidation is politically risky, especially in a down economy. The size of the adjustment is one roadblock. In their chapter, IMF economists Garth Peron Nicholls and Alexandra Peter estimated that “five countries—Antigua and Barbuda, Barbados, Grenada, Jamaica, and St. Lucia—would require a fiscal [consolidation] adjustment above 5 percent of GDP relative to their primary balances in 2011” to lower respective government debt levels to 60 percent of GDP by 2020, the target set out by the Eastern Caribbean Currency Union (ECCU).

Many Caribbean governments already raise 20 to 30 percent of GDP in tax and other revenues; more may cause tax fatigue or inhibit growth. Structural reductions in current expenditures, although typically the most politically difficult for countries to implement, achieve the most successful, lasting fiscal consolidation, Okwuokei concludes in another chapter.

In their survey of 206 cases of large debt reduction from 1970 to 2009, Amo-Yartey and Okwuokei found that half of the time countries reduced their debt through a combination of fiscal consolidation, growth and higher inflation.

In the other half of cases, governments restructured their debts or defaulted, implying a high frequency of loss to creditors. This is not a surprise. Seven Caribbean countries—Antigua and Barbuda, Belize, Grenada, Jamaica, St. Kitts and Nevis, St. Vincent and the Grenadines, and Suriname—have obtained relief of government debt over the past decade. Given lingering high debt levels, some Caribbean countries still face public debt sustainability challenges. “Fiscal consolidation is necessary,” the editors conclude, “but [it] may not be sufficient to bring down debt levels, since high primary surpluses would have to be maintained over a relatively long period.”

What is a sustainable debt level? The answer varies by country, depending on factors such as economic diversification, depth of domestic capital markets, record of fiscal policy and debt management, and external and financial vulnerabilities, among others.

In Nicholls and Peter’s examination of natural debt limits and fiscal contingent liabilities, they find that by most measures, the majority of English-speaking islands have overborrowed and lack fiscal space for emergency borrowing.

In The Eastern Caribbean Economic and Currency Union: Macroeconomics and Financial Systems, edited by IMF economists Alfred Schipke, Aliona Cebotari and Nita Thacker, another group of authors tackles the historical growth and competitiveness challenges of the ECCU.

The monetary union includes many of the Caribbean’s most indebted countries. In their chapter, economist Chris Walker and IMF research assistant Sebastian Acevedo assess the suitability of the ECCU and the members’ peg to the U.S. dollar at a time of acute fiscal and economic stress for several countries. The authors find “no compelling case for a shift away from the combination of a currency union and currency board now employed by the OECS [Organization of Eastern Caribbean States]/ECCU.”

A history of shared political, economic and monetary institutions forges an important bond for the small-island ECCU members. The ECCU countries and territories have shared a common monetary authority and currency since 1965, well before gaining political independence or internal governing autonomy from the United Kingdom. The inheritance of shared institutions distinguishes the ECCU from the eurozone or African monetary unions, whose members started with separate central banks and monetary policies.

As Schipke and fellow IMF economists Koffie Nassar and Arnold McIntyre illustrate in chapter three, the economies of scale offered by shared institutions (common currency, capital and goods market, financial system supervision, and statistics) are a strong incentive for the small-island ECCU members to integrate.

And as IMF economist Sarwat Jahan demonstrates in chapter nine, despite the region’s fiscal woes, the Eastern Caribbean Central Bank has not monetized member governments’ deficits—and indeed has allowed some to default on external debt—thereby sustaining credibility of the monetary regime.The book makes clear that more needs to be done to sustain the union, however.

“Growing fiscal deficits, lack of fiscal integration, unsustainable debt, and challenges in the financial sector could threaten the currency union’s very foundation. […] The tasks for policymakers are significant and the rapidly changing global environment has increased the need for action,” Schipke, Cebotari and Thacker reflect.

The books together fill a knowledge gap on the Caribbean debt crisis with helpful policy lessons for financial analysts, economists, investors, resident taxpayers, and policymakers alike.

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