20/09/2022

Latin America and the New World Order

Where are we heading in this current world reality and what is the meaning of the end of the Pax Americana, those 75 years between 1945 and the 2020 pandemic?

I believe that these have been by all standards the most brilliant years in the history of humanity. It was a period of universal peace and assertion of Western values as an international world organisation. The United States and other countries that won the Second World War imposed the Western model of life with its Judeo-Christian and Greco-Roman values that were the spirit of the creation of the United Nations in 1945 and of Breton Woods a year earlier.

Looking back on those 45 years, one has to accept that spectacular things happened. The importance of peace was stressed in the sense of building a world regulated by a principle that did not exist before: solidarity. Up until then, there had been a predominance of the charity of the great churches in the form of the tithe.

In this period, life expectancy has doubled compared to the previous twenty centuries. At the time of Jesus of Nazareth, it was 30 years; at the end of the Second World War, it was 45 years, while today’s life expectancy is 75 years.

An order of economic cooperation was also established and an agreement was reached whereby the issues of violence and the use of arms pertained to the United Nations Security Council, which, despite some unpleasant experiences, is nevertheless a point to be highlighted.

Likewise, poverty went from 40 per cent of the population in 1945 to 10 per cent today. Yet, since the population has multiplied, it still represents a lot of people.

Another observation is that at that time there were 51 independent countries while there are 200 at present.

When seen together, these elements show us the importance of this period, which was one of enormous opportunities. It is worth noting that the Pax Americana was preceded by a very violent period. The years from 1914 to 1945 were the worst in human history. Two wars, a hundred million dead, the Holocaust, and the most serious economic crisis in history. I think that Pax is over.

To a large extent, the pandemic was a catalyst for its culmination. On the one hand, it highlighted the fact that we are a species and that we can disappear like all other living species on this planet. On the other hand, the emergence of China as a competing force for the economic and social leadership of the world began to be perceived.  Furthermore, it raised awareness about the fact that in 70 years China had made a miracle: it had suddenly become the world’s leading trader, with a huge amount of assets in the field of technology, poverty reduction, etc.

Previously, Europe, the opposing power, was an ally that complemented the dominance of the United States. In contrast, there is now a power that aspires to share or at least be part of universal leadership. When we look at the current juncture, the issue is fundamentally how the period ahead is organised with respect to global leadership. And there are great dangers.

As civilised people, we can hope for such a transition to be achieved through the sharing of universal leadership in a competitive fashion. Yet, we cannot envisage what a confrontation between these two powers would mean for this new stage.

The great challenge facing humanity today is to ensure that the current transition to a new world order does not lead to a confrontation between the United States and China. Although there is a great deal of social confrontation in the United States, the only thing that unites them all is the “anti-Chinese” sentiment. This is worrying because if societies do not have the necessary flexibility to adapt, and if leaders turn to intransigence by not agreeing to share and coexist, we have a complex problem ahead of us.

As for the war in Ukraine, there should never have been such an aggression, and today the reality is that we are dealing with a scenario in which the ability to enforce peace has failed.  Indeed, achieving peace in Ukraine is very important, not only because of the deaths that are taking place every day, but also because the continuation of this conflict for a long time may change the economic and political borders of the world.

We should not forget that Russia is the West; it is a part of Europe stretching from the Atlantic to the Urals. In some ways this confrontation can significantly alter the world’s political balances and trade flows. For example, a Russian-Chinese trade flow is being developed at the moment, which is very important for both countries. Yet, it means a departure from other kinds of trade flows, which directly affects the Western world.

The Ukraine issue is important not only because of the political reality itself, but also because in some way it has an impact on establishing these pacts between China and Russia, in which India is now also becoming involved. There is an interest that goes beyond the conflict per se so that it does not affect the transition that awaits us with new borders. Let us consider, for example, how important the conflict has been in terms of food or the production of fertilisers

There is also an economic challenge. Today we have an ongoing international inflation process and we learned from what happened in the 2008 crisis that inflation is an enemy of stability and of the poorest sectors of society. In the meantime, the proposed solutions are still the conventional ones: raising interest rates, cutting credit, and so on. This will have important economic and social implications and will also affect our region, as we the events in 1982 and 2008 have shown.

Faced with this context, Latin America has what it has always had, and we know that wars produce a rise in the prices of raw materials, that this brings economic benefits to the countries that export them, and that this bonanza is short-lived. However, this time I believe that the window of opportunity will be shorter than on previous occasions

In this regard, I am concerned about Latin America’s silence regarding the international debate. Although the region is relevant on all issues, it has no stand on the events that are taking place in the world. This is inconsistent with the region’s history and its responsibility.

Latin America today is a world power that matters and will matter more in the future. We have a third of the world’s drinking water and 8% of the world’s population, while China has 7% of the world’s drinking water and almost 20% of the world’s population.  Moreover, one third of the world’s arable land is in Latin America. Let’s bear in mind that China lacks land and water, which is its weakness, and needs to solve it with Australia, New Zealand and Mercosur. It is worth noting that Latin America also has an enormous capacity to produce energy and mineral resources.

Our region cannot be ignored in the world and therefore has a certain authority that must be exercised appropriately. We have had responsibilities in the past that we are now leaving aside; we are not acting as a region and the international bodies that represent us are weakened, so their presence is becoming more complex.

The concrete question is: how can we steer ourselves to increase Latin America’s presence and thereby contribute to world peace and international understanding?

The first thing Latin America should do is to take a stand on environmental issues. It has already done so in the United Nations, but it should take it a step further. If, for example, we could have an Amazon pact with all the countries that share that area, it would give us great authority. We could also have a pact linked to the issue of food - Latin America is a major supplier of food to the rest of the world. The same applies to health. We are in a position to have a health pact based on the lessons learned from the pandemic. If Latin America had clear solutions to these issues, it would greater gain political, intellectual and moral authority in the world.

Another challenge posed by the current juncture is that of international trade. Latin America has been particularly dynamic in this field. Such has been the case since the GATT (General Agreement on Tariffs and Trade) in 1947 and then with the declaration of Punta del Este in 1986 and the subsequent formation of the WTO. However, new things are beginning to emerge. We have seen the large dimension of treaties and international agreements as a complementary form of the WTO.

That is all very well, but we have to go a little further and understand that a new dangerous element has appeared: security in international trade, the “we trade with friends”.  I understand the motivations, but it is very risky and harmful to free and competitive trade

The trade architecture that resulted from the WTO is in jeopardy and a new element is now being introduced that could complicate investment. If companies are going to relocate, so be it, but who is going to determine whether a country is a friend or a foe??

In addition to trade, we have to look inwards. I am very “pro Mercosur”. We Uruguayans have a 2% share of Mercosur; we completely depend on this structure and I understand that we have to invigorate it. My idea is to continue thinking in the flexible manner of ALADI (Latin American Integration Association), an institution from the 1960s that tried to make the overly ambitious objectives we had with ALALC (Latin American Free Trade Association) more flexible. We need to think about partial agreements that afford us greater flexibility with each other, which, together with the private sector, would provide us with important resources for managing international affairs. Finally, I believe that Latin America should have a regional education programme. There are organisations available to this end and an institutional structure that could support these objectives.

Summary of an oral address at Fundación Foro del Sur

Enrique Iglesias is the president of the Astur Foundation. He was the president of the Inter-American Development Bank ( BID) from 1988 to 2005. From 2005 to 2014, he chaired the Ibero-American General Secretariat (SEGIB)