South America – United States : Towards a new regional order, by Hector R. Sanchez (Argentina)

Since their birth the United States had two different foreign policies. Whereas they related to Europe as a peer, in America they developed a policy of expansion [1] and intervention [2] in competition with Great Britain.

The US stated the Monroe Doctrine in 1823 [3] (« America for the Americans »). In the 19th century, the Doctrine of Manifest Destiny [4] was proclaimed. Both were completed in 1904 with the Roosevelt Corollary [5] . Since then, the US intention to intervene [6] in the local affairs of governments whose policies were not aligned with its own interests has been explicit. Latin America began thereafter to be considered an area of US hegemony. These policies corresponded to a continental context of British preponderance, where British capital and manufactures were in direct competition with the US. To counteract the predominant English influence in the continent, the States conceived their Pan-American Union similar to the schemes of other imperialist powers who were also trying to create and consolidate their own areas of influence through Pan-Germanism, Pan-Slavism, etc. To such effect, the US organized in 1889 the First Pan-American Conference [7] .

Since then, Pan-American conferences based on the Monroe Doctrine became the axis of every foreign policy of the White House toward Latin America, aimed at imposing their influence. Between 1889 and 1901, the US sponsored the first four Pan-American conferences : Washington (1889), Mexico City (1901), Rio de Janeiro (1906), and Buenos Aires (1910), where the Pan-American Union was finally founded, as a permanent organism presided by the US Secretary of State. Subsequent conferences were celebrated in Santiago de Chile (1923), Havana (1928), Montevideo (1933), and Lima (1938), paving the way towards a fluid and operative mechanism for chancellors to meet and consult.

After World War II, after Yalta, the US, as one of the cores of the bipolar new order, reached its maximum capacity in the export and reproduction of its worldview over its hegemonic area, now covering the whole Western block.

Since then, the US has applied a policy of direct and indirect intervention under the pretext of fighting against Communism, which later became drug trafficking (1973), and today against terrorism (2001). The US Department of State has proved bountiful in the development of tools to implement its policy : it created diverse state agencies (CIA [8] , DEA [9] , NSA [10] ), various foundations (Ford, Rockefeller), the School of the Americas [11] , etc.

The US regional strategy has been to block the consolidation of national and regional policies perceived to stand against their national and economics interests.

Latin-American regional policies in the post-WWII world order : ALCA – MERCOSUR

Several treaties [12] were articulated to implement the US post-1945 world order. In 1948, the Inter-American Treaty of Reciprocal Assistance (ITRA) was signed. Almost at the same time, the Organization of American States (OAS) was established. The Inter-American Defence Board had already been created during WWII (1942).

A tendency towards independent regionalization from the US began to arise in Latin America in the 1960´s. The process was kicked off by treaties like the Latin-American Integration Association (LAIA) [13] , the Central-American Common Market (CACM) [14] , the Andean Pact, and the Caribbean Community [15] . This trend was in part neutralized by the United States. In the 1980´s and 1990´s, this tendency seemed to revive, giving birth to the Common Market of the South (MERCOSUR) [16] , the Bolivarian Alternative to Latin America and the Caribbean (ALBA) [17] , the Caribbean States Association (CSA), the Andean Community [18] , the Central-American Integration System (CAIS), the Caribbean Common Market (CARICOM) [19] , and the G-3 (Mexico, Venezuela, and Colombia.)

Beginning in the 1990´s, through diverse treaties, the US developed a strategy of regional integration under its hegemony, which can be traced to the North-American Free Trade Agreement (NAFTA) [20] , with Mexico and Canada, supported by other instruments such as the Free Trade Area of the Americas (FTAA) [21] , the Summit of the Americas [22] , several summits of American foreign ministers, as well as other mechanisms and partial agreements (e.g. the Caribbean Basin Initiative.)

After September 2001, the US changed their policies and sought the continental integration under their control of all existing regional and sub-regional systems, founded on the free circulation of capital, goods, services and investments, the protection of intellectual property and tried to establish a commission to deal with controversies arising from grants, dumping and compensatory rights. The transfer of lawsuits and disputes between foreign companies and locals governments [23] , from domestic to international courts, provides further « safeguard and legal security » to foreign investments.

In early 2004, negotiations were interrupted as collided US and MERCOSUR interests. The US had no intention to reduce protections to its agriculture (grants and tariffs). In counterpart, Washington argued that Brazil was unwilling to open up to foreign services and investments. This prompted a change of US strategy, aimed at building their hegemonic region through signing bilateral Free Trade Agreements (FTA). The US has already signed FTAs with Canada and Mexico [24] , five Central American countries (Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica) (CAFTA) [25] , as well as the Dominican Republic [26] , Chile [27] , Peru [28] with Colombia [29] and the negotiations with Ecuador failed.

During the eight years of the Bush administration, the rampant weakening of the US allowed part of Latin America to strengthen intra-regional ties. It marks the loss of US hegemony in the region [30] . During this period, the region established new commercial relationships with China [31] and the European Union [32] ; and, on the other hand, Venezuela established strong bonds with countries like Iran [33] , China [34] and Russia .

The current dynamics allow seeing a launching of a new geopolitical order that unfolds as a synthesis of two competing tendencies. The US seeks to keep Latin America under its control (FTAA) while South America tends to organize itself within its own geopolitical region (MERCOSUR and ALBA) [35] .

USAN, milestone towards regional integration in South America

First forebear of an political unity proposal for Latin America was right after its independence, the Amphictyonic Congress of Panama (1826) [36] . This was a Simón Bolivar’s projet , who intended to create a Confederacy of Iberoamerican Peoples extended from Mexico to Chile and Argentina.

Today, after the failure of the Washington Consensus and the neoliberal measures that it recommended [37] , the twelve countries that conform South America [38] are starting to walk a independent integration way. The European Union is a pattern that is been taking into account by such project [39] .

The Union of South American Nations (USAN) founding statement was signed on December 9, 2004, in Ayacucho, Peru. The Text of its Constitutive Treaty [40] was approved on May 23, 2008, in Brasilia. The goal of this union is to strengthen political dialogue between the Member States, by securing a agreement-making space to support regional integration and participation in the international scenario with a global foresight to actively and creatively that contribute in the design of a new geopolitical world order [41] .

The ambitious objective goal is organize the Union of South American Nations, following similar steps witch the EU [42] gave. The obstacles to be tackled are multiple ; they include social, economic and political issues. The region is far from uniformity [43] with contradictory interests [44] and feeble commercial integration. Nonetheless, a commercial increment is verified in the intra-regional trade in the recent years [45] ; it had a sustaining commercial exchange increase between 2004 and 2007 (87%) [46] , shifted from USD 62.000 million to USD 116.000 million. The intra-regional exports of Latin American Integration Association represent 15,4% of the total sales and imports, 18,5%. These advances are below the necessary to establish solid processes of interdependence. The predominance of extra-regional commerce and the US weight in the different sub-region are the main weakness.

South America’s economic potential is enormous [47] . The region boasts an extension of 17.6 million km2. Its diverse territory nests equally diverse ecosystems like the Caribbean [48] , Amazonia [49] , Andes, Altiplano [50] , Pantanal [51] , Pampa [52] , Cerrado [53] , and Patagonia [54] . The population rises to 377 million, representing 67% of all Latin America and 6% of the total world population. Furthermore, it is linguistically integrated, given that almost all speak Spanish or Portuguese. Its Gross Domestic Product is approximately 3.800 thousand million USD [55] . The region holds one of the largest reserves of fresh water and biodiversity in the world, as well as immense energetic, mineral, fishing, and agricultural richness.

Article 2 of the UNJASUR Treaty defined the objective and extends of the organization. This community has been proposed by governments based on the convergence of the two grand commercial blocks of the region, MERCOSUR and the Andean Community, towards a free-trade zone incorporating Chile, Surinam, and Guyana.

This process evolves through : . Political pacts and coordination ; . free trade agreement ; . physical, energetic and media integration ; . harmonization policy regarding rural and agri-food ; . cooperation in technology, science, education, and culture and . integration between companies and civil society.

The structure of the project is conformed by a general secretariat established in Quito (Ecuador) ; a unique parliament in Cochabamba (Bolivia) ; a temporary presidency ; a board of chiefs of state and government (supreme organ, deliberative, requiring unanimity for decision-making) ; a board of ministers of foreign affairs ; and a board of delegates.

Integration policies that have been initiated :

. Within the MERCOSUR framework Several Treaties and Protocols have been signed among the countries, on matters like free circulation of goods, services and productive factors, establishment of an external common tariff ; Recognition of primary studies and secondary no-technical, of studies certificate revalidation, establishment of the contentious jurisdiction in contracts of civil or commercial nature taken place among physical or juridical particular people, harmonization of intellectual property rules in MERCOSUR, as Marks ; Recognition of the university titles of grade granted by the grateful University of each country, only for prosecution of post-grade studies ; Iinter-institutional governmental coordination and cooperation to cooperate against organized crime, to improve the mechanisms of penal persecution and cooperation in the areas of its competition. Extradition agreement within MERCOSUR ; Elimination of the obligatory use of passport in the associate countries the block…

. Within the framework of UNASUR are organizing various Councils

The South American Energy Council [56] , created on April 16, 2007, through the Isla Margarita Declaration [57] , became part of the Union of South American Nations.

Several South American nations have large hydrocarbon resources. Argentina has long ago achieved self-sufficiency. Brazil accomplished it recently [58] and with new offshore findings in its territorial sea [59] , is headed towards becoming an oil power. Peru [60] and Bolivia, with enormous gas reservoirs and very low consumption, are distinct exporters. Venezuela is South America’s Saudi Arabia.

The actual significance of hydrocarbons exceeds the energetic frame. They are one of the fundamental raw materials of the contemporary age. Most Latin American countries are short of capital, equipment and technical experience required for its autonomous exploitation. But Venezuela productive and Brazil productive and technical powers, can contribute those resources to a regional policy.

Within a economic integration project, energetic integration is a must. The challenge lies in combining Venezuela’s power, the political leadership of a self-sufficient Brazil, Argentina an Colombia intermediate role, the richness of Peru and Bolivia, and the needs of Chile, Paraguay, and Uruguay.

The South American Defence Council was a Brazilian proposal aiming at the joint elaboration of security policies. This initiative consolidates integrative actions by reaffirming the sovereignty and rights over the goods and resources of the region. It was set in motion on March 10, 2009, in Santiago de Chile [61] .

The invasion of Ecuador’s territory by the Colombian Army to attack and kill Raúl Reyes [62] , second in command of the Colombian Revolutionary Armed Forces (CRAF), evidenced the need for the newly-formed Union of South American Nations to have a permanent discussion mechanism to deal with regional conflicts without foreign intrusion.

Given the reactivation of the US Fourth Fleet [63] , the violation of Venezuela’s airspace [64] and the will to install a military base in Palanquero, Colombia [65] , plus those already existent in the region [66] (all US actions seeking to maintain its regional hegemony) the need for a regional and coordinated defence policy is evident.

Amazonia constitutes in one of the big reservations of water for the future one and it is also a deposit of matters cousins. There have been campaigns to internationalize it [67] . By means of satellites, all the natural wealth of Latin America is classified and studied by United States. It is at the moment without doubts for Brazil one of its conflict hypotheses that politics of defence has very present. Today with the discovery of new reservations of petroleum in its continental sea [68] that conflict hypotheses becomes even more relevant for Brazil. In consonance, it is important to highlight the declaration of Brazil’s Minister of Defence, Nelson Jobim, who stated that his government will not allow the US Fourth Fleet to patrol Brazilian maritime territory.

The objectives of the Defence Council are :

• Establishment of a permanent and periodical consulting mechanism for Ministers of Defence, in order to increase the transparency of defence policies, modernization programs and joint/combined training of forces.

• Coordination of operative systems for ad hoc deployment of sub-regional groups for peace operations authorized by the UN, OAS and other international organizations, for humanitarian crisis and natural catastrophes.

• Establishment of civil-military mechanisms to deal with risks and threats to sub-regional security, like drug trafficking, smuggling, and international terrorism.

• Creation of agencies or work groups to design, finance and develop joint defence programs, maximizing national potentials and favouring the absorption of the know-how to allow the development of local industries, at least in those niches or sectors where technological levels allow it.

The South American Defence Council will work this year on gathering information about the participating states, so as to later on give shape to an effective defence mechanism.

The creation of the Health Council [69] of the Union of South American Nations was approved on December 16, 2008, in the extraordinary summit of the Costa do Sauipe Forum (Brazil). It is a consulting and consensus-building organism conformed by the Ministers of Health of USAL. Its objective is to consolidate South America into a space of sanitary integration.

The initiative focused on five work areas : « Epidemiological Shield » ; development of a universal healthcare system ; universal access to medicines ; health promotion ; development and management of health-related human resources.

South America slowly abandons USD

Turning to local currencies for commercial exchange, South America has initiated a process that tends to reduce dependency on USD.

The LAIA (Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Peru, Paraguay, Uruguay, and Venezuela. Panama is about to be incorporated) seeks to strengthen intra-regional commerce by fostering the Reciprocal Payment and Credit Agreement (RPCA), the use and empowerment of local currencies.

The questions arising around the health of USD as refuge currency and the falling imports of the main powers, generated proposals in the G-20 meeting in London rose to replace this currency like international payment instrument. In spite of the lack of initial consent on this topic, serious doubts were outlined on USD as international currency [70] .

Argentina and Brazil were the first to follow this initiative. On September 8, 2008, after two and a half years of intense technical work, they signed a bilateral treaty within the MERCOSUR to allow foreign commerce transactions to be made directly in local currencies. In October of the same year, the new mechanism was set in motion [71] .

On the same wavelength, on May 6, 2009, Brazil agreed with Uruguay on abandoning USD for their commercial exchange [72] . Brazil is also studying with Colombia the possibility of swapping USD for local currencies for their commercial activities [73] .

During the London summit, Brazil directly proposed to China that the Chinese Renminbi and the Brazilian Real be used as a settlement currency, and that the U.S. dollar be abandoned [74] .

Argentina and China agreed to a three-year currency swap totaling 70 billion yuan, ($10 billion USD) [75] .

Bank of the South : following the steps of the EU ?

Although the Bank of the South [76] initiative was put forth by President Hugo Chavez [77] , together with his Argentine peer Nestor Kirchner [78] , signing the Memorandum of Agreement on this issue on February 2007. Brazil, initially opposed to the idea, who finally injected it with dynamism. What was in discussion is if the Bank of the South would be similar to the European Development Fund (EDF) [79] that finances infrastructure projects in the areas of relative smaller growth to promote autonomous development, absolutely necessary to diminish the regional asymmetries. Brazil already has a Bank of Development, BNDES, with a very superior wallet of investment to the World Bank. This has been in principle the reason of the opposition of Brazil. But the function of the national banks of development is the promotion of the national companies, and what is implicit in the Bank of the South is a regional new architecture that bears three interrelated elements [80] :

• A Monetary Unit of the South.

• A Fund of monetary stabilization, the Fund of the South.

• A Bank of the South that uses the existent reserves for the development of the region.

It is necessary to stop the transfer of resources from the South to the North to have genuine funds for the region. On the other hand, the integration of South America demands a financial independent system of USD in a moment in that this currency is losing its rol of international foreign currency.

The bank is proposed as an alternative to the IMF, World Bank, and Inter-American Development Bank. However, the Bank of the South will not function like a lender in the IMF style. Instead, it will finance development projects in key economic areas for the geopolitical integration of the south :

• Land, air and maritime infrastructure ;

• Food supply nettig ;

• integral health system netting ;

• system of education for transformation ; and

• an integrated energetic system.

This financial project aims to boost measures of economic integration that strengthen the Union of South American Nations. It also works on the creation of a common currency within the next five years, approximately [81] .

It was officially formed in Buenos Aires on December 9, 2007, with the signatures of the member presidents. Initially, its headquarters will be in Caracas, with two offices in Buenos Aires and La Paz.

On May 8, 2009, the Ministers of Economy and Finances of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay, and Venezuela met in Buenos Aires to evaluate the final statutory terms of the future entity [82] . Now it is time for the presidents and congresses of each country to ratify the agreement.

The agreement establishes that the seven partners will contribute a capital of USD 7000 million. In order to reach this sum, Buenos Aires, Brasilia and Caracas will provide 2000 million each. Montevideo and Quito, 400 million each. Asunción and La Paz, 200 million.

Regarding the functioning of the Bank of the South, each country will have a vote in its board. However, for the approval of projects beyond USD 70 million, the endorsement of two thirds of the total capital of the bank will be required. The weight of each country in the decision-making process, one of the issues that took the longest to resolve, was thus settled. Such projects will call for the positive vote of at least two of the biggest investors : Argentina, Brazil, and Venezuela.

Final considerations

South America has begun supplementing its production and consumption capacity, to increase the interdependence of their economic activities : industries, services and markets. I.e. it has begun construction of an effective economic region. It is creating an organization to coordinate policy and take the ability to mobilize forces and resources in his defence, or in pursuit of common objectives. This aims to be a political region.

That the way of the South American integration in which the problems to solve are many. Beginning by the ideological diversity of the different governments. Some tend to move away of the model neoliberal, nationalizing the natural resources, putting restrictions to the entrance of speculative capitals, controlling driving of the transnational ones, and tried to move away of the recipe book of the IMF and the World Bank. There are others like Colombia, Peru and Chile, with a totally coincident policy with the interests of Washington (the political projects of Alvaro Uribe and Alan Garcia diverge explicitly of the sustained ones by the Andean Community of Nations). At the same time there are several disputes pending of resolution : Chile and Peru be opposite by the territorial sea ; Argentina and Uruguay by the installation of Botnia plant, Chile and Bolivia by the exit to the sea for this last one ; the small countries of the MERCOSUR demand more power of decision ; Venezuela and Colombia maintain permanent border controversies ; and Venezuela make claim a portion of the territory of Guyana.

Argentina and Brazil, for their potential to produce foodstuffs, their energetic resources, both of strategic for the future world, and the size of their markets, have emerged as pillars of South American integration. Brazil stands out for its integration policy, based in their interstate coordination and consistency of its State policies. Argentina, if is able to consolidate their social and economic integration, and to develop a coherent foreign policy and consistent with the importance of regional integration, by theirs history and its economic weight can become an important element in this process. Eventually, Venezuela could add impetus, support on their apparent determination to ingress into Common Market of the South, which will take place when with Venezuelan project achieved compatibility with MERCOSUR one.

Brazil is the only country in the region that maintains consistent and enduring productive project and an industrial development policy at regional level. Their have been set for his economic and political weight in the main regional integration motivating. Have government agencies with strategic thinking that operate as « brain public institutions » and a natural exchange of ideas with academic institutions.

Their strategy prioritizes the need to integrate all national markets and their populations. For those is necessary to develop infrastructure, transport and communications (waterways, automotive roads, railways, ports, airports, pipelines, oil pipelines, communications networks, etc) and to unite the two great watersheds of South America (Plata and Amazon). The aim is to foster regional synergy that enhances the cumulative effect of the region, creating a dynamic that goes beyond the existing concentrated trade on commodities and the prevalence of their exports to developed countries.

Argentina, that developed an industrialization degree to mid-century XX, it fell down by the last decades, during the military dictatorships, Alfonsin’s government and finally for the period of Menem’s government (1989-1999). During the ten years of this last one that tried to construct with the United States similar relations that Argentina had with Great Britain for more than a century, led to the destruction of the nascent industrialization [83] but also human resources and the state-administrative structure. The process of national reconstruction inevitably will be prolonged. In spite of all this, Argentina conserves an important relative weight in the region.

We have tried to give an objective vision of the progresses reached about South American integration. We are optimistic based on the opportunities that are opening the present systemic global crisis. But we do not have to ignore the existing risks, between which one stands out the formidable visible asymmetry between the Brazilian colossus and the rest of its potential partners. Insofar as the partners accomplish to reduce this gap, we can augur the success of this integrating process as a new geopolitical region.