Are we about to witness a big power shift in Latin America?Venezuela, Brazil and Argentina are languishing in differing shades of turmoil, steadily losing ground to regional underdogs. The Pacific Alliance, an historic trade agreement between Mexico, Peru, Chile, and Colombia (and coming soon: Costa Rica), has the potential to recolor Latin America’s economic map and introduce some new regional powerhouses to the world stage. As The Atlantic points out, not all the credit goes to the underdogs:
One reason the Pacific Alliance may succeed is the increasingly urgent need to transcend the chronic failure to link Latin America’s economies.The Alliance would never have become a priority for its four members if Brazil had offered a credible plan to further economic integration with its most trade-oriented Latin American neighbors. Or if Hugo Chávez had been less successful in making free trade a bad word. The late Venezuelan president prioritized political over economic integration, and he was not shy about using his country’s oil to scuttle “neoliberal free trade agreements.” The United States, meanwhile, was too distracted by emergencies abroad and hobbled by gridlocked politics at home to launch initiatives capable of inspiring Latin American leaders.
The newly formed bloc is made up of Latin America’s fastest growing economies. These states boast the region’s most competitive, business-friendly economies and the lowest inflation rates. Current transactions between these countries represent a mere 4 percent of their total trade; the potential for increased financial cooperation is immense. They have already eliminated 92 percent of trade tariffs.The Latin Lefties are none too pleased with the new arrangement. Bolivian President Evo Morales called the alliance a Washington-led conspiracy. Brazil’s Lula and Ecuadorian President Rafael Correa decried the Alliance as a neoliberal takeover.But while these leaders sulk, their countries continue to disintegrate. Mass unrest continues to roil Venezuela; protestors are fed up with government corruption, media censorship, and a failing economy. An Argentinian inflation crisis threatens economic disaster. Brazil, which the WSJ called a “wilting giant”, faces yet another year of economic contraction. On top of that, the country’s 2014 World Cup preparations are foundering and civil unrest is growing more belligerent (and then there’s Brazil’s upcoming summer Olympics preparation to worry about).The Pacific Alliance offers a glimmer of hope for a Latin revival. For all their leaders’ buoyant rhetoric and revolutionary zeal, the region’s past powerhouses have failed to deliver in many ways. If the Pacific Alliance is the start of something fruitful, it would be another nail in the Bolivarians’s coffin.