Paths to Regional Integration:
The Case of MercosurFollowing the devaluation of the Brazilian real in early 1999, the Mercosur community staggered through a year of recrimi-
nations, tariff threats, and soul-searching. On November 9, 2000, the Latin American Program hosted a conference to
review Mercosur’s development, economic and political importance, re-
cent troubles, and current efforts to effect a “relaunching” of the common
market enterprise.
1300 Pennsylvania Avenue, NW Washington, DC 20004-3027
Ana Barón, of Clarín, observed that in the coming months Mercosur will
face a deciding moment. Recent tensions among members and persistent
economic malaise in Argentina, Paraguay, and Uruguay, along with the
potential reinvigoration of the Free Trade Area of the Americas (FTAA)
initiative, have stirred doubts regarding Mercosur’s viability as a strategy
for long-term growth.
ins
ide
th
is i
ss
ue Mercosur...................................... 1 - 3
Political Transition in Peru .......... 4 - 5
Learning from Foreign Models ... 5 - 7
The South American Summitt ..... 8
Haiti’s Elections & U.S. Policy .... 8 - 9
Challenge of Urban Governance.... 10 - 11
Brazil at the Wilson Center .......... 11- 13
Globalization & Welfare Spending .. 13-14
Staff Notes ..................................... 15
Intern Notes ..................................... 15
Public Policy Scholars ............................ 15
Recent Publications ....................... 16
Upcoming Events ........................... 17
From left to right: José Guilhon-Albuquerque, Ambassador
Rubens Barbosa of Brazil, and Ambassador Leila Rachid-
Cowles of Paraguay at the Mercosur Conference.
THE
LATIN AMERICAN PROGRAM
WOODROW WILSON CENTER
Winter 2001
Felipe de la Balze, of the Council on International Relations in Bue-
nos Aires, warned that despite Mercosur’s early success at “normaliz-
ing” relations among neighbors, primarily Argentina and Brazil, the
accord’s shallowness and informality are no longer acceptable. Although
intra-regional trade has improved dramatically since 1991, it has failed
to rise significantly above 20 percent of the region’s total trade. To do
so, de la Balze suggested, governments must agree to formal, transpar-
ent measures of macroeconomic coordination and standardization, and
implement mechanisms for dispute settlement. Furthermore, failure to
meet these standards or to abide by the rulings of fair arbitration—pref-
erably by a third party—must be met with clear penalties. Otherwise,
Mercosur is likely to remain what it is today: an incomplete customs
union, an incomplete common market, and an economic accord con-
strained by a lack of political courage and vision.
José Botafogo Gonçalves of the Brazilian Foreign Ministry downplayed
these negative perceptions. He said that while it is true that 1999-2000 was
a difficult period, only five percent of total bilateral (Argentine-Brazilian)
trade was affected by the disputes. In addition to Brazil’s economic troubles,
NOTICIAS
regional uncertainty was amplified during this period by the
important presidential elections in Chile, Argentina, Paraguay,
and Uruguay. Now that new democratic governments are in
place, negotiators are ready to tackle the unsettled issues of
the region’s trade agenda, particularly exemptions for the auto
and sugar industries. For the first time, the ministers of fi-
nance and economics and the directors of the central banks
from each member country are meeting to reach agreement
on common economic statistical standards and goals for in-
flation, debt, and fiscal policies. Commitment to the gradual
convergence of interests and policies, instead of pressures
against one country to respond ad hoc to the needs or desires
of another, is the appropriate path for the consolidation and
stabilization of Mercosur.
Regarding Mercosur’s economic performance, Roberto
Bouzas of FLACSO - Buenos Aires observed that the easy
gains from the liberalization of regional trade came before
1995. Economic cooperation is much easier within a cli-
mate of collective and international growth. Today, politi-
cians and negotiators must face the difficult decisions of re-
moving protection for large, sensitive industries that could
result in significant social dislocation and political resistance,
either from labor or from powerful local producers. Resis-
tance to further liberalization is more mobilized, and national
leaders and members of congress face a public more disso-
nant and less accepting of short-term costs.
Preferring to see the glass half full, Beatriz Nofal, a member
of the Argentine Congress and former minister of trade and
industry, emphasized Mercosur’s success at improving the
stability and competitiveness of the region’s economies. Po-
litical change and economic improvements suggest that we
will see more cooperative, closer relations among members.
According to Nofal, in order to capitalize on this opportu-
nity, member governments should focus collectively on pro-
moting macroeconomic convergence, agreeing on develop-
ment policies for underdeveloped regions or industries, em-
bracing Chile as a member and thereby committing themselves
to reduced tariff levels, and highlighting these commitments
and progress in promoting greater exports to other regions.
José Tavares of the Organization of American States argued
against the need for more formalized institutionalization. In-
stead of looking to the European Union for comparison,
Tavares suggested that analysts should study the free trade
accord between Australia and New Zealand, the success of
which was due not to any supra-national governing commit-
tee but to increasingly congruent domestic policies and standards.
According to Pedro da Motta Veiga of the Brazilian National
Confederation of Industry, Mercosur’s political environment
always has been conditioned by dramatic asymmetries among
the member countries. Nations of different sizes, capacities,
and self-identities tend to have divergent interests, which ex-
plains the loose institutionalization of Mercosur. Recover-
ing from the doldrums of the 1980s, these countries shared a
commitment to economic growth and stability through the
first half of the 1990s, but the differences among their na-
tional interests became apparent again in the turbulence of
recent years. According to Motta Veiga, the FTAA process
could prove a powerful incentive for Mercosur countries to
make difficult political decisions and improve regulations,
standardization, and common macroeconomic goals, in or-
der to use the bloc as leverage in their negotiations with the
United States and NAFTA countries. Success, however, will
require extraordinary political vision, open-mindedness in ne-
From left to right: Roberto Bouzas, Beatriz Nofal, and Ricardo Rozemberg
2
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gotiations, and courage to accept a politically treacherous
short- and medium-term path.
Taking a long term view, Monica Hirst of FLACSO-Buenos
Aires argued that despite Mercosur’s commonly held flaws,
the partnership has generated positive spillovers in security
relations, local city-to-city and state-to-state partnerships,
investment and business affairs, and has enhanced mutual
interdependence and understanding. Even without further
institutionalization or a coherent and concessionary Brazil-
ian leadership, Mercosur can continue to be a stabilizing fac-
tor, regardless of FTAA or other external developments.
Alcides da Costa Vaz of the University
of Brasilia agreed that too much atten-
tion is paid to Mercosur’s external
agenda, institutionalization, and rela-
tionship with other trade blocs. What
is most important about Mercosur, ac-
cording to Vaz, are the internal politi-
cal, legal, and economic reforms that
have accompanied it and to which it
gives support. Undue attention to in-
ternational disputes of little consequence, or strategic impli-
cations of trade, tend to distract attention from the Mercosur’s
central objectives, which are to improve economic stability
and increase competitiveness and growth. These improve-
ments depend less on increased bilateral exports than on the
proliferation of fair standards, transparent markets, and com-
petitive practices. The basis and support Mercosur provides
for the promotion of these critical reforms are significant
but indirect.
During a final panel on Mercosur in a regional and global
perspective, Robert Devlin of the Inter-American Develop-
ment Bank described a recent IDB study that emphasizes
the importance of macroeconomic stability for increasing
trade. Much of the gains in Mercosur trade in 1991-1997
are related to the success that member countries demonstrated
at stabilizing their exchange rates. By contrast, recent ten-
sions over divergent exchange rate systems and the difficulty
of establishing macroeconomic coordination pose a signifi-
cant challenge to continued growth in intra-regional trade.
Devlin ended on a realist note: macroeconomic coordina-
tion, as seen today in Europe, is the result of twenty years of
discussion and forty difficult years of experimentation.
José Augusto Guilhon Albuquerque of the University of São
Paulo and Riordan Roett of The Johns Hopkins School of
Advanced International Studies both presented Mercosur as
a potentially important development in international politi-
cal relations. Guilhon described the
pattern within the GATT and other mul-
tilateral negotiations to liberalize trade
as including the promotion of certain
standards in economic regulation and
public policy. These standards, which
purportedly stem from a global concern
with good governance and human
rights, labor, and environmental crite-
ria, often mask the protectionist or stra-
tegic economic interests of developed countries. If Mercosur
could consolidate its interests by agreeing to valid, locally
appropriate standards in these areas, the bloc could prove a
valuable tool in future negotiations. According to Roett,
Mercosur already has proven its significance within GATT
negotiations as well as vis-à-vis the FTAA initiative.
Mercosur, with Brazil as its leader, seems destined to domi-
nate South American regional relations in the near future.
Also, the growing ties among Chile, Mercosur, and the Euro-
pean Union are deeper and more important than the U.S. gov-
ernment realizes.
Ana Barón and Amb. José Botafogo Gonçalves
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Peru’s Political Transition
In an October 30, 2000, seminar on “Political Transition in
Peru and the Role of the International Community,” Assis-
tant Secretary General of the Organization of American States
Luigi Einaudi described the gradual growth of threats to de-
mocracy in the hemisphere: coups d’etat without the mili-
tary, the rise of political movements claiming to represent
the popular will independent of political parties, the spread
of civic apathy, increasing economic and social conflicts, in-
stitutional incapacity, corruption, and narcotrafficking and
other organized crime. He described as an “optimistic illu-
sion” the notion that the international community could, with
a single recipe and voice, unite to confront such challenges,
emphasizing in particular that the OAS was, by itself, a weak
institution unless it enjoyed the active political and financial
support of member states.
The OAS role in the 2000 presidential elections in Peru fol-
lowed on many years of OAS activism on questions of de-
mocratization and electoral observation. Einaudi described
the abusive attempts of the Peruvian state to influence the
elections and the breakdown of negotiations to improve the
electoral environment. This led to the withdrawal of the OAS
observer mission following a determination by its director,
former Guatemalan foreign minister Eduardo Stein, that there
were no conditions for free and fair elections. Ultimately,
opposition candidate Alejandro Toledo withdrew, and
Fujimori was re-elected to an unprecedented third term.
The hemispheric response to such events fell far short of the
Peruvian opposition’s hope that the international community
would call the elections illegitimate. Einaudi said that there
was an initial reluctance by Peru’s neighbors to jeopardize
normal relations with the regime, assuming that Fujimori
would last through the end of his term in 2005. That position
yielded to what Einaudi called the “common culture of de-
mocracy” during a meeting of foreign ministers in Windsor,
Canada in June. Instead of calling for new elections, how-
ever, OAS member states set before themselves the more
orderly task of attempting reforms in the Peruvian system.
A mission headed by OAS Secretary General César Gaviria,
Lloyd Axworthy, then Canadian foreign minister, and
Eduardo Latorre, the outgoing foreign minister of the Do-
minican Republic, went through four stages: 1) defining a
framework for discussion, including such issues as the sepa-
ration of powers, reform of the electoral system, human rights,
and reform of the intelligence service; 2) identifying time
frames for resolving issues; 3) reorganizing what had been
decided following Fujimori’s surprise announcement on Sep-
tember 16, 2000, that he would call for new elections in which
he would not be a candidate, and in which he announced the
“disactivation” of the intelligence service (during this period
the OAS played a role in convincing the government of
Panama to grant asylum to intelligence chief Vladimiro
Montesinos); and 4) following Montesinos’ return to Peru,
carrying out negotiations over constitutional and electoral
reforms prior to the convening of new elections on April 8,
2001. Einaudi expressed guarded optimism regarding future
outcomes in Peru, but also emphasized uncertainty regard-
ing such issues as military unity and discipline and Fujimori’s
own intentions.
George Washington University professor of political science
Cynthia McClintock contrasted the forceful response of the
4
NOTICIAS
From left to right: Cynthia McClintock, Joseph S. Tulchin, and Luigi Einaudi.
OAS and the U.S. government to the autogolpe of April 1992
with the relatively tepid response to the 2000 elections. She
described the disbelief, if not betrayal, felt by the Peruvian
opposition when, in the face of clear manipulation of the elec-
toral playing field, and a determination by the OAS’s own
observer mission that the elections did not meet international
standards for freedom and fairness, neither the U.S. govern-
ment nor the OAS deemed the elections illegitimate.
McClintock concurred with Einaudi that the OAS alone had
neither the resources nor the capacity nor the mandate to go
as far as the Peruvian opposition had wanted in condemning
the elections. Given that reality, however, she said that U.S.
and OAS efforts to engineer Montesinos’ departure from Peru
sent a strange and unfortunate signal regarding international
priorities. Ultimately, she argued, convincing Panama to take
Montesinos was an act far more interventionist than a strong
statement condemning the elections.
McClintock described the euphoria in Peru in reaction to
Fujimori’s September call for new elections and for the de-
activation of the intelligence service, which some likened to
the fall of the Berlin Wall. She called the events of Septem-
ber 16, 2000, a “triumph for democracy,” and said that many
in the international community had failed to recognize grow-
ing signs of Montesinos’ isolation, a direct product of his
corruption and abuse of power.
Learning from Foreign Models
At a September 14, 2000, conference on “Learning from For-
eign Models in Latin American Policy Reform,” experts and
practitioners from several Latin American countries and the
United States analyzed the ways in which innovative pro-
grams and policy experiences in one nation influence deci-
sion-making in other countries. This topic is of increasing
significance in the era of globalization, in which cross-na-
tional communication and policy diffusion are rapidly inten-
sifying. As a result, the world has seen striking waves of
policy reform. For example, the ripple effect of Chile’s pen-
sion privatization first affected Latin America, then Eastern
Europe, and has triggered debates even inside the United
States.
Conference co-organizer and former Wilson Center fellow
Kurt Weyland of Vanderbilt University defined the central
questions guiding the conference: Why do some policy in-
novations turn into “models,” whereas other reforms do not
inspire emulation? How is information about models trans-
mitted across countries? How do foreign models influence
policy making in other countries? How are these innova-
tions adapted to the specific needs and requirements of the
emulating countries? Finally, do foreign models improve
5
NOTICIAS
Sarah Brooks & Joan Nelson James McGuire
José Paulo Chahad Stephen Kay & Kurt Weyland
policy making by inducing countries to adopt promising in-
novations, or do they hold risks as nations may rashly imitate
reforms that are not well-suited to their specific needs?
Joan Nelson of the Overseas Development Council argued
that the presence of a clear “model” greatly facilitates policy
reform. For instance, Chile’s pension privatization spurred
similar (though less radical) changes in other Latin Ameri-
can countries. But Chile’s health and education reforms were
much more complex and did not turn into handy “models;”
policy change in those issue areas has therefore been much
less thorough. Like Nelson, Sarah Brooks of Duke Univer-
sity stressed that international financial institutions such as
the World Bank and the International Monetary Fund, which
promote models that conform to their market reform agenda,
cannot impose changes. Loan conditionality, in particular, is
too blunt an instrument for demanding specific institutional
reforms.
After discussing these general themes, the conference focused
on three sectoral issues: social security, unemployment in-
surance, and health care. Gustavo Demarco of the Superin-
tendency of Pension Fund Administrators in Argentina ar-
gued that the architects of Argentina’s social security reform
deliberately modified the “Chilean model” of radical pen-
sion privatization and designed a mixed system, which com-
bined a “solidaristic” public pillar (that is, a system of social
protection based on principles of solidarity) with other mea-
sures that were purely individualistic in nature, in this case, a
fully funded private pillar. This adaptation took into account
the preference for moderate redistribution in Argentine soci-
ety, but it was designed by technical experts and did not
emerge from political negotiations. In the Brazilian case,
according to Vinícius Pinheiro of Brazil’s Ministry of Social
Security and Welfare, the urgent fiscal constraints prevailing
in the late 1990s impeded pension privatization. Instead, the
government concentrated on reducing financial disequilibria
in the existing “pay-as-you-go” system, especially by intro-
ducing “notional accounts” that tie pension benefits to the
contributions made by individuals. While agreeing with the
basic thrust of these analyses, commentator Stephen Kay of
the Federal Reserve Bank in Atlanta, Georgia, stressed that
Argentina’s partial pension privatization would be unthink-
able without the Chilean model.
The panel on unemployment insurance began with José Paulo
Chahad of the University of São Paulo and formerly of
Brazil’s Labor Ministry. The Brazilian system embodies many
of the guidelines stipulated by the International Labor Orga-
nization and based on First World experiences. The system
6
NOTICIAS
therefore has a strong solidaristic component. Some of its
deficits, such as the missing integration with active labor
market policies, result precisely from the lack of sufficient
emulation of First World models. By contrast, former Chil-
ean Labor Ministry official David Bravo, now of the Univer-
sity of Chile, showed that in designing proposals for unem-
ployment insurance in Chile, policy makers were strongly
influenced by economic analyses that highlighted the flaws
of First World systems, such as the diminished incentive for
individuals to find a new job. Therefore, the Chilean gov-
ernment proposed a system of individual accounts for unem-
ployment insurance, which would limit benefits to a worker’s
accumulated contributions. Wilson Center fellow James
McGuire of Wesleyan University asked both authors to ex-
plain why the same foreign models—First World systems—
stimulated emulation in Brazil, but served as a deterrent in
Chile.
Chile’s promotion of private health insurance certainly was
a model for the profound health reform enacted in Colombia
in 1993, according to Juan Pablo Uribe of the World Bank
and formerly of the Colombian Health Ministry. But policy
makers also drew on other nations’ experiences and intro-
duced solidaristic mechanisms that were designed to broaden
coverage and guarantee citizens a basic package of health
care benefits. These efforts have attained considerable suc-
cess. Carlos Cruz of the Mexican Social Security Institute
showed that Mexico’s partial health reforms during the 1990s
followed the general recommendations advanced by the
World Bank, but Mexican experts adapted these guidelines
to the specific needs of their own country. As a result of
domestic political influences, however, these reform efforts
have had mixed success. Commentator William Savedoff of
the Inter-American Development Bank argued that educa-
tional experiences in First World countries greatly facilitate
the “import” of foreign models by Third World experts. Fur-
thermore, learning from foreign models is a political process
affected by conflicting interests, not a purely intellectual ex-
ercise.
On the concluding panel, Juan Carlos Navarro of the Inter-
American Development Bank maintained that countries learn
not only from clear, well-integrated models, but also from a
variety of other experiences and partial innovations. In fact,
learning from failure may be more important than the emula-
tion of success. Also, learning may sometimes mean the mere
imitation of innovations, rather than a profound rethinking
of established policy approaches. Evelyne Huber of the Uni-
versity of North Carolina at Chapel Hill emphasized the need
to pay more attention to power relations in the analysis of
policy diffusion. In particular, she stressed the influence of
the international financial institutions in promoting models.
Countries have gone much farther in adopting foreign inno-
vations where the World Bank and the IMF have pushed
models (as in social security). By contrast, in policy sectors
in which the international financial institutions have not ad-
vocated ready-made models, reform has remained limited.
An edited volume with revised versions of the conference
papers is currently in preparation, and will make the findings
of the conference available to the academic and development
community.
From left to right: Juan Pablo Uribe and Carlos Cruz
7
NOTICIAS
The South American
Presidential Summit
The August 31-September 1, 2000, meeting in Brasília of
South America’s twelve heads of state represented a historic
step in a process of integration, according to Carlos Eduardo
Lins da Silva, associate editor of the Brazilian financial pub-
lication Valor Econômico. Speaking at a September 27, 2000,
Washington Policy Forum, Lins da Silva said that the sum-
mit was motivated by the sense that South America would
be left out of the benefits of globalization, as trade blocs form
in North America, Europe, and Asia. The summit pointedly
excluded Mexico, which since the advent of NAFTA Brazil
sees as part of a North American bloc, as well as the coun-
tries of Central America and the Caribbean.
Lins da Silva argued that the size of Brazil’s economy, popu-
lation, and territory make it a natural leader in South America.
He questioned, however, whether the various heads of state
had sufficient political will to pursue regional integration.
He mentioned as obstacles the different exchange rates be-
tween Argentina and Brazil, as well as ambivalence on the
part of the current Argentine leadership on the question of
sub-regional, as opposed to Latin American integration. Some
in Brazil’s business community, meanwhile, appear fearful
that a Free Trade in the Americas Agreement (FTAA) will
damage Brazilian interests if the FTAA comes into effect
too early. Part of the process of Brazil’s preparing for the
FTAA, said Lins da Silva, involves pursuing South Ameri-
can unity.
While most of the emphasis of the summit involved com-
merce, the presidents also considered issues of democracy.
Emphasizing that non-interference is one of the strongest tra-
ditions in Brazilian foreign policy, Lins da Silva described a
certain shyness in the discussion around how to keep democ-
racy on track in the region, and stressed that most leaders
preferred to work backstage in its defense. Lins da Silva
said that Colombia constituted the most difficult problem in
South America, underscoring Brazil’s willingness to respond
Haiti and U.S. Policy
to the Colombian government’s requests for help. Brazil must
be careful, however, he said, given the potential implications
of a strong U.S. presence in Colombia and the explosive situ-
ation that exists there. In the animated debate that followed
the presentation, Brazilian Ambassador Rubens Barbosa criti-
cized the U.S. press for focusing its coverage of the summit
on the Colombia issue and exaggerating the extent of dis-
agreement between South American leaders and the U.S. gov-
ernment. Brazil’s position and that of the twelve presidents
was in firm support of President Andrés Pastrana’s peace ef-
forts, he said.
At a November 21, 2000, Washington Policy Forum on
“Haiti’s November Elections and Challenges for U.S. Policy,”
three distinguished experts painted a mostly bleak portrait of
conditions within Haiti in advance of the country’s Novem-
ber 26 presidential elections.
Georges Fauriol, director of the Americas Program at the
Center for Strategic and International Studies, described a
sequence of political events since 1990—Haiti’s first mod-
ern test of elections—marked by deterioration and progres-
sively worsening electoral conditions. There had been a par-
allel deterioration in the economic and social arenas, he said,
especially after elections in mid-1997 led to the freezing of
much international assistance. The security environment had
also worsened, despite significant efforts to reform the po-
lice and judicial system. Fauriol criticized the Haitian lead-
ership for disregarding the welfare of its citizens, especially
at a time when the international community had been willing
to help in whatever way possible.
Fauriol described the ruling Lavalas party as divided among
factions, but argued that most political discussion in Haiti
revolved around former (and current) president Jean-Bertrand
8
NOTICIAS
Aristide. He also said that deep divisions within the Demo-
cratic Convergence political opposition impeded the formu-
lation of a coherent policy alternative.
Almami Cyllah, director of the National Democratic Institute’s
Haiti office in Port au Prince, described an upsurge of civil
society participation in the political life of the country, par-
ticularly over local issues. NDI’s efforts have focused on
training poll watchers and election observers, he said, as well
as providing for debates and forums for political parties.
Cyllah said that high levels of mistrust still characterized the
relationship between politicians and civil society organiza-
tions, and that too many politicians were still unwilling to
subordinate their own personal ambitions for the good of the
country. He underscored how much more difficult it is to
build a democratic system than to bring down a dictatorship,
and emphasized the concept of good governance as integral
to the effort to build democracy.
While insisting that the United States has real interests in
Haiti and must act to protect them, Caleb McCarry, Majority
Professional Staff, House International Relations Commit-
tee, voiced concern over the continuing deterioration of the
Haitian economy as well as growing violence. He said that
conditions in U.S. law mandated a certification that elections
were being held in a free and fair manner, and that the Hai-
tian government was cooperating with anti-narcotics efforts.
Such a certification could not be made, he said, underscoring
that while assistance could not flow to the government, it
was essential to help the Haitian people. The only way out of
a protracted crisis, he said, was to support pluralism and civil
society.
Many of the sobering predictions at the November forum were
born out by subsequent events. Amidst low voter turn-out,
Aristide predictably won the November elections, which the
Democratic Convergence alliance boycotted and deemed il-
legitimate. Talks between Lavalas and the Convergence col-
lapsed just prior to Aristide’s inauguration in early February
2001, with each side blaming the other for intransigence. The
opposition named an alternative president, setting the stage
for ongoing political deadlock.
9
The Challenge of Urban
Governance
The workshop on Urban Governance in Major World Cities
brought together dozens of leading experts from cities around
the world on December 7-8, 2000. They addressed emerg-
ing governance issues in nine large metropolitan areas— São
Paulo, Santiago, Bombay, Manila, Tokyo, Abidjan,
Johannesburg, Moscow, and Kyiv—and discussed common
themes emerging in state-society relations. This workshop
was sponsored by the Wilson Center’s Comparative Urban
Studies Project, but is included here because so much of the
discussion touched upon Latin American cities and upon is-
sues of crucial significance to Latin America.
Wilson Center Fellow Richard Stren dubbed the workshop’s
central theme as “The Irresistible Force Meets Godzilla.” In
On October 19, 2000, in a closed meeting at
the Woodrow Wilson Center, United Nations
special envoy to Colombia Jan Egeland met
with top Colombian policy analysts to discuss
the ongoing peace process.
NOTICIAS
From left to right: Steven Friedman, Alfredo Rodríguez, and Revekka Voulfovih
10
his humorous metaphor, “the irresistible force” is the emer-
gence of large, complex metropolitan areas affected by glo-
balization, migration, and the diffusion of economic and po-
litical power. “Godzilla” is the growth of citizen mobiliza-
tion that is placing increasing social demands on these enor-
mous urban areas. The meeting point between these two
dynamics is the challenge of urban governance: how to ad-
dress complex problems while remaining responsive to citi-
zen concerns.
According to Stren the emergence of mega-cities and the
concomitant problems of urban governance on a very large
scale are relatively new phenomena. The social energies
unleashed in these mega-cities can be described as a “Fourth
Wave.” However, while Samuel Huntington’s “Third Wave”
focuses on regime change at the top levels of national gov-
ernments, the “Fourth Wave” is driven by grassroots expres-
sions of political enthusiasm and involvement in large urban
regions. Increased social mobilization directed at urban is-
sues may lend a high degree of legitimacy to local govern-
ments which can respond favorably to these demands, but it
also creates problems for metropolitan leaders who are ac-
customed to non-participatory planning approaches.
Tensions naturally emerge between the need for government
coordination of large metropolitan regions and the impor-
tance of democratic participation in smaller units within these
same regions. Evelyn Levy of the Catholic University of São
Paulo described the plans of the incoming city government
to divide São Paulo into smaller subdivisions to bring gov-
ernment affairs closer to the neighborhoods where people live.
Patricia McCarney of the University of Toronto noted that,
in contrast, Toronto had consolidated several smaller units
into a larger metropolitan area, which had made the city less
responsive to citizens’ concerns.
Steven Friedman of the Centre for Policy Studies in South
Africa observed that in some cities in the developing world,
this dilemma is further compounded by the prevalence of
informal networks that have emerged to supply needs that
are not met by local governments. Joyce Malombe of the
University of New Hampshire agreed with this, noting that
in many countries municipal governments are a very mini-
mal presence and largely ineffective at responding to citi-
zens’ needs.
However, in some cities municipal governments have gained
renewed force and have implemented innovative strategies
for participatory governance. These initiatives have provided
encouraging, though highly uneven experiences. María Elena
Ducci of the Universidad Pontificia Católica de Chile argued
that municipal governments are most productive and effi-
cient when they create mechanisms to solicit citizens’ opin-
ions on development projects. This helps ensure that re-
sources are allocated correctly to projects that city residents
want and avoids obstructions from angry citizens’ organiza-
tions. She cautioned, however, that the new emphasis on
letting market forces decide urban plans may increase the
exclusion of the poorest sectors of cities.
This point was underscored by Aprodicio Laquian of the Uni-
versity of British Columbia, who stressed the importance of
including the voices of the excluded in city planning, and
the need to find local government mechanisms that generate
civic participation and create public accountability to citi-
NOTICIAS
From left to right: Koffi Attahi, Richard Stren, and Ronald Vogel
In pursuit of its objective of creating a forum for Brazil and
Brazil-related issues, the Wilson Center’s Brazil Project held
four meetings of its Working Group and two public lectures
with distinguished Brazilian scholars and policymakers.
On September 27, 2000, social scientist and former director
of Brazil’s Census Bureau Simon Schwartzman discussed
central challenges facing the Brazilian government. Para-
mount among them was the need to assure balanced and sus-
tained economic development, as well as to improve demo-
cratic institutions, which are increasingly defined by social
imbalances and economic inequalities. According to
Schwartzman, these inequalities are exacerbated by the weak-
11
zens and communities. While the combination of participa-
tion and accountability may not always lead to more effi-
cient city management and effective economic performance,
it will at least make the highly challenging governance of
complex, dynamic, and problematic mega-cities a shared
enterprise between citizens and the state.
Brazil @ The Wilson Center
nesses in the Brazilian legal system. He emphasized the posi-
tive economic results following the 1998-99 financial crisis,
yet warned that persistent and serious social problems clouded
the country’s long-term prospects.
Schwartzman gave positive marks to the government of
Fernando Henrique Cardoso in the area of educational re-
form, but expressed concern regarding aspects of reforms in
the agrarian, science and technology, and power sectors. If
Brazil manages to maintain current growth rates, its power
generation capacity will soon reach a critical level.
Schwartzman believes that Brazil has made extraordinary
progress in recent years but still needs to promote economic
development based on a culture inspired by ethical values.
Special advisor to Brazilian President Fernando Henrique
Cardoso, Vilmar Faria, chaired the second meeting of the
Working Group on October 18, 2000. He outlined five ma-
jor problem areas for Brazilian governments over the last
fifteen years: the exhaustion of the import-substitution eco-
nomic model, the level of closure of the Brazilian economy,
the restructuring of Brazil’s financial and banking system,
the strategic long-standing demands in the health and educa-
tion sectors, and the reconstruction of democracy following
the long and negotiated transition from military dictatorship
to democracy.
According to Faria, the central challenge for the Cardoso
administration is to address these five problems simulta-
neously and democratically in an environment where long-
standing inequities continue to intensify. Faria summarized
Cardoso’s approach, highlighting successful policies to pre-
serve macro-economic stability as well as those aimed at so-
cial development. The goal is to keep inflation under control,
assure growth rates of about 6 percent and address the prob-
lems identified in basic social services while attempting to
reverse the historical distortions in those social sectors. Ob-
stacles to accomplishing these goals are the lack of resources,
NOTICIAS
Helio JaguaribeAlbert Fishlow
A meeting of the Brazil Working Group with Bolivar Lamounier.
12
the challenge of coordinating a variety of actions that must
be executed in a decentralized manner, and the prospect of
political discontinuity from administration to administration
suggested by Brazilian political tradition.
On November 8, 2000, Albert Fishlow from the Council of
Foreign Relations put Brazilian macroeconomic policy un-
der the microscope. He began by
noting that the 1999 devaluation
was a good example of how a
country should confront a specu-
lation crisis. The successful man-
ner in which Brazil overcame that
crisis was a result of solid fiscal
and monetary policies and the
designation of Armínio Fraga as President of the Central Bank.
Fraga’s Wall Street savvy allowed Brazil to anticipate mar-
ket backlash, select appropriate measures for confronting the
crisis, and regain investor confidence.
Fishlow discussed the privatization of many state-owned
banks, adding that he considers this policy to be basically
successful. He was less enthusiastic about the Cardoso
administration’s efforts to open the country to foreign trade.
While conceding that some advances have been made, he
reiterated that Brazil is still very unprepared to compete in
the trade arena. Fishlow believes that Brazil should design
policies aimed at transforming the notion of industrial ex-
clusivity into something more conducive to international com-
merce. Fishlow also underscored the challenges of increas-
ing foreign trade and domestic savings and overcoming dis-
parities in income distribution.
On December 6, 2000, Helio Jaguaribe, one of Brazil’s most
distinguished political scientists, discussed “South America
and the New World Order,”
touching on the implications
of globalization, Mercosur,
the proposed South American
Free Trade Area and the Free
Trade Area of the Americas
(FTAA). In his assessment,
Mercosur has been highly
positive for FTAA members, accomplishing its economic and
political goals. Jaguaribe also cited distance, investment flow,
and competitive inequality as obstacles to applying NAFTA
principles to the region.
At the fourth meeting of the Working Group on December
12, 2000, Bolívar Lamounier, director of research at the
Instituto de Estudos Econômicos, Sociais e Políticos de São
Paulo (IDESP) focused on the current political landscape and
prospects for the future. Lamounier analyzed the close asso-
ciation between domestic politics and economic results in
Brazil. The Brazilian economy has improved remarkably
since the 1998 devaluation crisis; as a result, the political
situation in Brazil is also remarkably stable. The crisis served
as a catalyst that helped President Fernando Henrique Cardoso
push previously unpopular reforms through Congress and,
after six years, has allowed his administration to create po-
litical stability. Even though serious social problems such as
poverty and inequity remain, a consensus has finally emerged
acknowledging the necessity of long-term solutions.
President of Brazil’s Central Bank Armínio Fraga discussed
political, social, and economic trends at a December 12, 2000,
NOTICIAS
Globalization & Welfare
Spending in Latin America
In order to examine the impact of economic globalization on
developing countries, Robert Kaufman, professor of politi-
cal science at Rutgers University, presented the results of his
study, “Globalization, Domestic Politics and Welfare Spend-
ing in Latin America: A Time-Series Cross-Section Analy-
sis, 1973-1997,” at a January 25th Washington Policy Forum.
In the study, Kaufman and co-author Alex Segura of Colum-
bia University show that opening trade has led to a signifi-
cant decrease in social spending in Latin America, and that
the impact of domestic politics on welfare spending tends to
be limited. Commentators Joan Nelson, senior scholar at the
Woodrow Wilson Center, and Colin Bradford, professor of
economics and international relations at American Univer-
sity, highlighted several additional factors that have contrib-
uted to changes in social spending patterns in Latin America.
Kaufman analyzed the changes in government spending on
social security, health, and education in 14 Latin American
countries over a period of 25 years. Using statistical meth-
ods, the study sought to answer three basic questions: (1) to
what extent is social spending constrained by integration into
world markets? (2) how does the balance of party power af-
fect social spending, or more specifically, does a “left” ori-
ented government actually promote greater social spending?
and (3) what is the effect of the transition to democracy and
the increase in electoral pressure on social spending?
Using a complex series of economic and political variables
and controls, Kaufman and Segura’s research shows that a
high degree of trade liberalization leads to a decline in gov-
ernment spending on social programs. During the 1980s and
1990s, trade opening increased in Latin America by 50 per-
cent, leading to a decrease in social spending of $70US per
capita. This represented a significant amount in a region where
13
Director’s Forum chaired by Wilson Center director Lee H.
Hamilton. Respected for his swift and effective leadership
in the wake of the 1998-99 financial crisis, Fraga highlighted
Brazil’s commitment to improving economic growth and sta-
bility. To foster growth, Fraga emphasized continued
privatization, tax and trade reform, as well as investment in
education and health programs.
Fraga noted that regardless of changes in Brazil’s political
situation, the country would not allow itself to regress to the
closed economy and economic failure characteristic of much
of the 1980s and early 1990s. The Real Plan, he said, broke
a vicious cycle, ushering in sound macro-economic policy
that enabled Brazil to manage the kind of viable budget that
Fraga considers essential to the preservation of democracy.
Constitutional reform, the restructuring of state finance and
social security, and a floating exchange rate have contrib-
uted to a $9 billion decrease in the deficit, increased foreign
investment, as well as GDP and industrial growth.
For more detailed information on these meetings as well as
other Brazil @ The Wilson Center activities, please visit us
on the World Wide Web at: http://wwics.si.edu/brazil/
index.htm or contact Alex Parlini at: [email protected]
or (202) 691-4282.
Issue No. 3: Brazil’s Challenges and Prospects,
The Inaugural Meeting of the Working Group on
Brazil (November 2000)
Issue No. 2: The United
States and Brazil,
Strategic Partners or
Regional Competitors?
by Ambassador
Rubens Barbosa
(August 2000)
Issue No. 1: O Sistema
da Defesa Brasileiro, by
Minister Geraldo
Quintão (August 2000)
THINKING BRAZIL
NOTICIAS
average spending was $250US per capita. Furthermore, do-
mestic politics did not have a major effect on social expendi-
tures. There was no noticeable difference if a left-wing gov-
ernment was in power, nor if a country had transitioned from
dictatorship to democracy. This might be attributable to such
issues as the traditional weakness of labor unions in the Latin
American left, the ability of checks and balances to prevent
leftist presidents from implementing social programs, and the
practice of authoritarian regimes of using social spending as
a way of buying off potential opposition.
Kaufman cautioned that it is important to distinguish between
different types of social spending—social security expendi-
tures as opposed to health and education expenditures, for
example—in order to understand the impact of globalization
and domestic politics. Social security is mostly financed by
payroll taxes, causing busi-
nesses to oppose increased
social security spending as a
way of controlling labor
costs. Business tends to view
health and education spend-
ing, however, as an invest-
ment in human capital. In
Latin America, health and
education are sectors with
very strong unions that exert
their own pressure on govern-
ment officials. Expenditures in
these sectors are more likely to be
affected by domestic pressures.
Joan Nelson emphasized a point
recognized by Kaufman, that the
study does not take into account the
quality, equity, or efficiency of so-
cial services, only the quantity. In
Latin America, a large part of the
problem is not how much money is spent, but how it is spent.
In terms of democracy and the pressure governments receive
from the business sector, it would be important to look at the
effects and/or potential of campaign finance. The implicit
assumption in this study (and elsewhere) is that broad par-
ticipation is a counterweight to special interest influence. In
relatively new democracies, where globalization and
privatization have reduced politicians’ access to patronage,
competitive elections might increase the influence of the pri-
vate sector if it is the major source of campaign funds.
Colin Bradford reviewed government spending as a whole in
terms of a country’s GDP. Bradford indicated that in the
1980s and 1990s Latin American governments pursued ag-
gressive growth-oriented strategies while maintaining fiscal
austerity, and that this had likely led to a significant decline
in social expenditures as a percentage of GDP.
Colin Bradford
14
left: Participants gather for the
Washington Policy Forum on
“Globalization, Domestic Politics, and
Welfare Spending.”
NOTICIAS
above: Joan Nelson and Robert
Kaufman
The Latin American Program Staff
The Latin American Program has had a growth spurt, and we
take this opportunity to welcome our new staff members.
Administrative Assistant Luis Guevara joins us from the
Nature Conservancy. He holds a B.A. from the University of
Maryland in political science, with a concentration in
international relations. Julian Mayor, our new Program
Assistant, joins us from the international/embassy banking
division of Riggs Bank. He has a B.A. from Boston Univer-
sity in international relations, with a concentration in Latin
American studies. We also welcome Alex Parlini as Project
Assistant for the Wilson Center’s new Project on Brazil. Alex
holds a B.S. from the University of Maryland in natural re-
sources management, with concentrations in international
management and Brazilian Portuguese. Previously, he
worked in the translation and research section of the
Brazilian embassy in Washington, D.C.
Staff Notes
From left to right: (Bottom row) Heather Golding, Julian Mayor,
Amelia Brown, Alex Parlini. (Top row) Andrew Selee, Luis Bitencourt,
Joseph Tulchin, Cynthia Arnson, Luis Guevara.
PLEASE VISIT OUR WEBSITE:
wwics.si.edu/PROGRAMS/REGION/LAP/LAP.HTM
Public Policy Scholars
The Latin American Program welcomes our incoming Ar-
gentine Public Policy Scholar Rut Diamint, a professor and
researcher at the Universidad Torcuato di Tella in Buenos
Aires, Argentina. She is working on “Creating Defense Sys-
tems Amidst Institutional Weakness in Latin America.”
We also bid farewell to our Mexico Public Policy Scholars
Ilán Bizberg, director, Center for International Studies, El
Colegio de México; and Gustavo Verduzco Igartúa, profes-
sor of sociology, El Colegio de México. Felipe Calderón
Hinojosa was unable to join us but we congratulate him on
his appointment as chair of the National Action Party (PAN)
in the Mexican Chamber of Deputies. Rodolfo Stavenhagen,
professor of sociology, El Colegio de México, will visit us
occasionally in the spring as a non-resident Public Policy
Scholar while he is teaching at Harvard. His work concerns
“The Dynamics of Peace and Conflict in Chiapas.”
Intern Notes
We welcome back our Fall 2000 interns who will be with us
through the Spring 2001 semester. Craig Fagan is an M.A.
candidate in international relations and international econom-
ics in the Western Hemisphere Program of the Johns Hopkins
University’s School of Advanced International Studies.
Marianne Benet is earning her M.S. in the International De-
velopment Program of Georgetown University’s School of
Foreign Service. Micah Bump is a senior at Georgetown
University, with a double major in Business and Spanish.
Micah will pursue an M.A. in Latin American Studies in
Georgetown’s School of Foreign Service next fall.
We also wish to thank Sarah Breul of Colby College, our
intern for the month of January 2001. Sarah is a senior ma-
joring in international studies, with a concentration in devel-
opment studies. She is the first in a new program for Colby
students who come south for the winter.
15
NOTICIAS
16
Social Policy Project
“Decentralization, Social Spending and Social
Policy in Venezuela,” No. 6, March 2000.
Peace and Security in the Americas
“La seguridad nacional en México. Los desafíos del nuevo
siglo,” No. 22, August 2000.
“The Bilateral Security Agenda between Mexico and the
United States,” No. 21, August 2000.
“Amazônia como Tema de Política Internacional e de
Segurança Humana,” No. 20, August 2000.
“The Amazon as a Topic of International Politics and
Human Security,” No. 19, August 2000.
“Seguridad Ciudadana en Centroamérica: Condicionantes
Sociales y Mecanismos Institucionales,”
No. 18, August 2000.
“Citizen Security in Central America: Addressing
Conceptual and Operational Challenges,”
No. 17, August 2000.
Policy Bulletins
Recent
Publications
Working Papers
248. Robert Bach, “Campaigning for
Change: Reinventing NAFTA to Serve
Immigrants,” November 2000.
249. Paul Gootenberg, “Between Coca
and Cocaine: A Century of U.S.-Peruvian
Drug Paradoxes, 1860-1980,”
(forthcoming, March 2001).
250. Gonzalo Alcalde, Mercedes di
Virgilio, and Carlos Mendoza, “Junior
Scholars Training Program 2000,”
(forthcoming, March 2001).
Books
Social Development in Latin America:
The Politics of Reform. Joseph S.
Tulchin and Allison M. Garland, eds.
(Boulder: Lynne Rienner,October 2000).
Latin America in the New International
System. Joseph S. Tulchin and Ralph H.
Espach, eds. (Boulder: Lynne Rienner,
November 2000).
Submit requests in writing to:
The Latin American Program
Woodrow Wilson Center
1300 Pennsylvania Avenue, NW
Washington, DC 20004-3027
or via e-mail to:
NOTICIAS
17
THE WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARSLee H. Hamilton, Director
BOARD OF TRUSTEESJoseph A. Cari, Jr., Chair; Steven Alan Bennett, Vice Chair; Public Members: James H.Billington, Librarian of Congress; John W. Carlin, Archivist of the United States; WilliamR. Ferris, Chair-National Endowment for the Humanities; Roderick R. Paige, SecretaryU.S. Department of Education; Colin L. Powell, Secretary U.S. Department of StateLawrence M. Small, Secretary Smithsonian Institution; Tommy G. Thompson, SecretaryU.S. Department of Health and Human Services; Private Members: Dr. Carol Cartwright,President Kent State University; John H. Foster, Managing Partner Foster ManagementCompany, Jean L. Hennessey, Daniel L. Lamaute; Doris O. Matsui, Collier Shannon &Rill; Thomas R. Reedy, President & CEO iTRACS; Nancy M. Zirkin, Director PublicPolicy and Government Relations-American Association of University Women.
WILSON COUNCILB.B. Andersen, Cyrus A. Ansary, Charles F. Barber, Lawrence E. Bathgate II, Joseph C.Bell, Thomas J. Buckholtz, Conrad Cafritz, Nicola L. Caiola, Raoul L. Carroll, ScottCarter, Albert V. Casey, Peter B. Clark, William T. Coleman, Jr., Michael D. DiGiacomo,Donald G. Drapkin, F. Samuel Eberts III, I. Steven Edelson, J. David Eller, Sim Farar,Susan R. Farber, Barbara Hackman Franklin, Morton Funger, Chris G. Gardiner, EricGarfinkel, Bruce S. Gelb, Jerry P. Genova, Alma Gildenhorn, Joseph B. Gildenhorn, DavidF. Girard-diCarlo, Michael B. Goldberg, William E. Grayson, Raymond A. Guenter, VernaR. Harrah, Carla A. Hills, Eric Hotung, Frances Humphrey Howard, John L. Howard,Darrell E. Issa, Jerry Jasinowski, Brenda LaGrange Johnson, Dennis D. Jorgensen, ShellyKamins, Anastasia D. Kelly, Christopher J. Kennan, Michael V. Kostiw, Mr. Steven Kotler,Mr. William H. Kremer, Mr. Harold O. Levy, Mr. David Link, David S. Mandel, John P.Manning, Edwin S. Marks, Robert McCarthy, C. Peter McColough, Stephen G.McConahey, James D. McDonald, J. Kenneth Menges, Jr., Philip Merrill, Jeremiah L.Murphy, Martha T. Muse, Della M. Newman, Honorable Gerald L. Parsky Chairman,Michael J. Polenske, Honorable Donald Robert Quartel, Jr., J. Steven Rhodes, John L.Richardson, Margaret Milner Richardson, Edwin Robbins, Philip E. Rollhaus, Jr., OttoRuesch, B. Francis Saul, III, J. Michael Shepherd, George P. Shultz, Raja W. Sidawi,Deborah Siebert, Thomas L. Siebert, Ron Silver, William A. Slaughter, Timothy E.Stapleford, Mark C. Treanor, Christine M. Warnke, Pete Wilson, Deborah Wince-Smith,Mr. Herbert S. Winokur, Jr., Joseph Zappala.
UPCOMING EVENTS
March 29, 2001 - Sergio Aguayo,
Professor, El Colegio de México, The
Role of Civil Society in Mexico’s
Democratic Transition.
April 5, 2001 - Congressional Brief-
ing on Alternatives to the U.S. Drug
Certification Process (co-sponsored
with Senators Christopher Dodd and
Charles Hagel).
April 19 - 20, 2001 - Citizen Security
in the Americas: A Working Group
meeting (by invitation only).
April 25, 2001 - Energy and the
Environment in Brazil (co-sponsored
with Texaco, featuring representatives
of Petrobras, World Watch Institute,
Brazilian Ministry of Mines and
Energy, and others to be announced.)
NOTICIAS
SMITHSONIAN INSTITUTION
THE LATIN AMERICAN PROGRAMBULK RATE
THE WOODROW WILSON CENTERPOSTAGE AND FEES PAID
1300 PENNSYLVANIA AVENUE, N.WSMITHSONIAN INSTITUTION.WASHINGTON, D.C. 20004-3027G-94
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE, $300.00Address Correction Requested
NOTICIAS
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