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The Decade That Was (2003-2013)

Latin America has, for the most part, seen sustained growth, reduced levels of poverty and equality, and rising confidence and activism on the global stage

The death of Hugo Chavez came just days before the US marked the 10-year anniversary of the Iraq war. Both in the United States, as well as in Latin America, it is worth reflecting on the last decade – the lessons that should be learned, the risks and opportunities that lie ahead.

Not surprisingly, the Iraq anniversary has prompted a lot of soul-searching in the United States. The military adventure undertaken in March 2013 is widely, and rightly, considered among the most costly strategic mistakes in US history. Measured in any terms – human, economic, or political – the war was a disaster.

The story in Latin America over the past decade – which can be dated from the start of the Lula administration in Brazil in January 2003 – is, in contrast, a far happier one. The region generally performed well and witnessed a remarkable transformation. With Brazil, and now also Mexico, leading the way, Latin America has, for the most part, seen sustained growth, reduced levels of poverty and equality, and rising confidence and activism on the global stage.

For the United States, the Iraq war had huge political significance. After all, Barack Obama, reflecting public opinion, was first elected in 2008 in large measure because of his opposition to that war “of choice” (not necessity). His moves in Iraq, and now in Afghanistan (the US’s longest war ever) have fulfilled his promises of withdrawal.

Obama’s second term foreign policy cabinet – with John Kerry at the State Department and Chuck Hagel at Defense – only reinforce that direction towards greater caution. The Republican Party, meanwhile, has been increasingly torn between a more isolationist group and those traditionalists who are advocating for a muscular foreign policy.

There are, in some ways, parallels to another misguided and losing venture – the Vietnam War – which made Americans wary of military engagements. But that period was interrupted by the attacks on New York and Washington on September 11, 2001 – without which Iraq (and, of course, Afghanistan) would not have been conceivable.

It is hard to separate the myriad costs of the Iraq war with the financial troubles experienced in the United States, especially after the 2008 crisis, and the overall pessimistic mood (60 percent believe the country is headed in the wrong direction). For the United States, the economic costs of the war have been estimated at least at $1 trillion. (The economist Joseph Stiglitz calculates that the costs will reach some $3 trillion.)

Although the natural reaction in the United States has been to turn inward and be wary of further military adventures that entail committing troops (thus, the exception of the controversial use of drones), the challenge for Obama’s second term will be to come up with a strategic and credible foreign policy approach that takes into account the country’s interests and global responsibilities and also enjoys public support. The world is, if anything, increasingly turbulent – witness Syria, Egypt, and Libya today, and the continuing concern with Iran – and will demand US leadership that is clear about what to do, and what to avoid. The Iraq war weighs heavily.

In Latin America, meanwhile, the main risk following the last decade is that the region that has performed so well will fail to take advantage of the opportunity to carry out deep and pending reforms in education, justice, security, infrastructure and other areas that enhance productivity and competitiveness and create a foundation for long-term, broad-based development.

Complacency, even triumphalism in some countries, is a concern. The ruinous state of the Venezuelan economy after 14 years of Chávez’s rule should alert other commodity-rich South American countries to the perils of the so-called “dutch disease” and the need to have a diversified economy that is not so dependent on commodities – and so vulnerable to price fluctuations in the global market.

In addition, the end of the decade marks a moment when innovative social policies – largely the conditional cash-transfer programs – that have succeeded in reducing poverty levels will need to be complemented by new approaches that can meet the growing demands and expectations of the region’s expanding middle class. For this, a look at the record of efforts in Europe and the United States will be useful. Government programs need to keep pace with profound changes in the economy and society.

The shifting fortunes in the United States and Latin America over the past, crucial decade have been very clear. The United States has great strengths, and resilience, but two draining wars and a financial crisis and severe fiscal pressures undermined the nation’s confidence. And Latin America also continues to face major problems, though the social and economic advances since 2003 have been dramatic by many measures.

Are these tendencies reversible? Are these cyclical phenomena? It is hard to know. One can imagine different possible scenarios. But it seems clear that the shrinking, historic asymmetry between the United States and Latin America – which has been evident for decades but was accelerated in an unprecedented way from 2003-2013 – is likely to continue.

That demands a constructive US-Latin American relationship that is still being worked out – one that calls for a serious commitment and some imagination from Washington and, in Latin America, strikes a balance between Carlos Menem’s “carnal relations” of the 1990s and Hugo Chávez’s belligerent posture over the past decade.

Michael Shifter is president of the Inter-American Dialogue.

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