Call it a tale of two countries. Two would-be Latin American powerhouses, both with populations surpassing 100 million people – and both with weak presidents who are beset by corruption problems. Both, in other words, are severely underperforming countries, whose chronic inability to live up to their potential continues to undermine growth, stability, and hope for the future.
Begin just south of the United States border in Mexico, a one-time success story, which has been reeling for months. The trouble began in late September, when 43 students were kidnapped and murdered in Iguala. An appalling and grizzly atrocity to be sure, made worse by the alleged involvement of local law enforcement and even the mayor of Iguala. Local authorities in the southern state of Guerrero (home of Iguala) are evidently horrifically corrupt – they have been bought off by the local drug cartels. Unsurprisingly, Mexico has been rocked by weeks of protests as a result of the slayings.
But it’s not only local governments that bear the stench of corruption; in tandem, a corruption scandal has played out at the upper echelons of Mexico’s government. Last month, it was revealed that President Enrique Pena Nieto’s wife had purchased a multi-million dollar mansion from a company that had received major public works contracts from Pena Nieto when he was a state governor, and later from the central government. (A “real family home,” the First Lady said of the opulent $7 million property.) In fact, this year, a subsidiary of the company in question was part of a consortium that won a nearly $4 billion contract to construct a high-speed rail line. Indeed, there was only one bid – other companies claim they were not given enough time to bid on the project. The mansion flap points to a far too cozy relationship between certain companies and the Mexican government – the kind of classic corruption that has bedeviled the country for far too long. This news too sparked an outcry.
Unlike the leader of his neighbor to the north (President Obama is nothing if not very shrewd at playing politics), Mexico’s Pena Nieto has something of a political tin ear. To wit, in the midst of major anti-corruption protests, the president decided to travel some 7,000 miles away from home. While protests raged in Mexico, Pena Nieto elected to visit China and Australia. This was, suffice it to say, not a savvy political move, and his approval ratings suffered. That’s a shame, because Pena Nieto needs all the political capital he can get, as he continues on a bold reform agenda; he’s already opened up Mexico’s telecommunications market, as well abolished the country’s oil monopoly. But he wants to do more.
Now, Pena Nieto is in full damage control mode. His wife cancelled her mansion purchase. And, more seriously, Pena Nieto has announced an anti-corruption reform plan that will, among other steps, allow the central government to dissolve local police forces that have been infiltrated by drug cartels. “Mexico cannot go on like this," the 48-year old president said in announcing the plans, "After Iguala, Mexico must change." He’s right – though it remains to be seen whether fundamental change is possible in a country with such a rich and long history of endemic corruption.
Further south, Brazil has similar problems – a major corruption scandal involving the state-backed energy giant Petrobras is raging. The Brazilian Federal Police are currently conducting “Operation Car Wash,” and what they are finding is astounding. Executives at Petrobras, the world’s sixth largest energy company, are alleged to have paid bribes to Brazilian government officials totaling as much as $1.6 billion in exchange for lucrative government contracts. The bribe money was allegedly siphoned off of company profits. Senior executives at the company have been arrested, as have bosses of construction and engineering companies who work with Petrobras. More heads are sure to fall as the case develops.
It’s official: Dilma Rousseff is no Lula. The left-wing Brazilian president may have been reelected late last month, but she enjoys nowhere near the popularity that Luiz Inacio Lula de Silva – better known simply as “Lula” – once did. Rousseff managed to squeak by with only 51.6 percent of the vote in a runoff – a far cry from the 61 percent that Lula garnered when he stood for reelection in 2006. And Rousseff’s close shave came despite the fact that Lula came out and campaigned hard for her.
Vice President Biden and his entourage visited Brazil in mid-June to attend the USA versus Ghana World Cup game, a trip that also included meetings with both the president and vice president of Brazil.
When Brazilian president Dilma Rousseff canceled her October 23 White House state dinner, she created yet another foreign-policy embarrassment for the Obama administration. Rousseff’s visit, which was announced back in May, was supposed to be an opportunity for highlighting a new era of strategic cooperation between the Western Hemisphere’s two largest countries. It would have been the first state visit by a Brazilian leader since Bill Clinton hosted Fernando Henrique Cardoso in April 1995.
The State Department today announced a basketball exchange program with Brazil, according to a press release from the federal agency. The program is, at least in part, coordinated with the National Basketball Association (NBA).
Based on last week’s debate, both President Obama and Governor Romney believe that squeezing the Iranians economically is the best way—and perhaps the only way—to end their nuclear-weapons program without resorting to a military strike. Of course, nobody knows if sanctions will actually work. But if the United States is truly serious about crushing Iran’s economy, it must pursue a more aggressive strategy, and it must put more pressure on Iranian trading partners.
Last month in London, Mexico’s Olympic soccer team won gold by defeating its Brazilian counterpart, 2-1. The victory gave Mexico its first-ever trophy in a major international soccer tournament (apart from the 1999 Confederations Cup), and it proved that the soccer gap between Latin America’s two largest countries is shrinking, with Mexico catching up on the region’s traditional powerhouse. The Olympic final also became a metaphor for the recent performance of the Mexican and Brazilian economies.
In 2001, Goldman Sachs economist Jim O’Neill famously coined the acronym “BRIC” to describe four of the world’s most populous countries—Brazil, Russia, India, and China—each of which boasted great economic potential. Since then, China has enjoyed breakneck GDP growth while making very little progress on economic or political reform, and Russia has devolved into a petro-autocracy dangerously reliant on global oil prices. As for Brazil and India, they have reaped consistent accolades for their commitment to democracy and economic stability.
As Lula da Silva’s handpicked successor, Brazilian president Dilma Rousseff was widely expected to embrace his policies both at home and abroad. Domestically, she has mostly fulfilled those expectations. In foreign affairs, the story is a bit more complicated.
On June 2, the convicted Italian terrorist Cesare Battisti walked out of a Brazilian prison a free man. He did so after Brazil’s supreme court upheld the decision of former president Luiz Inácio Lula da Silva to refuse to extradite Battisti to Italy. A member of the left-wing terror group Armed Proletarians for Communism (PAC) during Italy’s blood-ridden “years of lead” in the 1970s, Battisti had been on the run from Italian justice for nearly thirty years, since escaping from a prison near Rome in October 1981.
The Brazilian magazine Veja is reporting that al Qaeda members have established an active presence in South America’s largest country, as have militants associated with Hezbollah, Hamas, and other terrorist groups. They are apparently engaged in fundraising, recruitment, and strategic planning.