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

NOTICIAS

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

3

NOTICIAS

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: parliniaj@wwic.si.edu

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:

lap@wwic.si.edu

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