The Bush administration, like its two predecessors, has expressed strong support for democracy in the Americas. It is now time to put its money where its mouth is.
Argentina's story in the 1990s was, in many respects, exactly what the United States would like to see happen throughout the hemisphere. The country has been a democracy since 1983, its longest span of constitutional government since the 1920s.
It has undergone a major foreign policy shift. Argentina resolved territorial disputes that once brought it to the edge of war with its neighbors, dismantled programs that could have led to the development of nuclear weapons, downsized its armed forces and became one of the most reliable U.S. allies in Latin America.
Argentina also became a poster child for market-oriented economic reform in the 1990s. The 1991 Convertibility Law, which pegged the Argentine peso to the dollar at a one-to-one rate, ended a devastating period of hyperinflation and helped to reintegrate Argentina into the global economy. The first Bush administration was a key ally in this process, supporting Argentina politically and financially.
Yet today Argentina is bankrupt, and its hard-won democracy is in danger. Mass riots and looting left at least two dozen people dead and forced President Fernando de la Rúa to resign in December. After more riots last weekend, Adolfo Rodríguez Saá also resigned a week after being appointed interim president.
A nearly four-year-long recession has pushed the unemployment rate to almost 20 percent and, according to one study, more than three million people into poverty in the last year alone. Argentina now stands on the brink of a huge debt default and a political meltdown.
The causes of the current crisis are disputed, but most observers agree that the same convertibility scheme that had ended the hyperinflationary crisis a decade ago left Argentine governments without instruments to respond to the recession that hit the country in the wake of the 1997 Asian financial crisis. Unable to increase the money supply or devalue the currency, governments were left only with fiscal policy instruments.
The de la Rúa government was also shackled by its $132 billion debt burden. Rather than boosting the economy through a fiscal or monetary stimulus, as governments normally do, Argentine governments did the opposite in their increasingly desperate effort to sustain international financial credibility: They cut spending in the face of recession and refused to dismantle the currency peg that once ended hyperinflation.
The recession deepened, unemployment soared, poverty widened and tax revenues plummeted.
No Easy Way Out
There is no easy way out of this crisis. Indeed, any interim government will have to undertake one or both of the two Ds that its predecessor desperately sought to avoid: default and devaluation. Both options will entail massive economic and political costs.
This is where the Bush administration can help. Argentina's successful economic adjustment requires approximately $50 billion in international support for its evolving international-debt and exchange-rate policies, consistent with its economic realities and its international financial obligations.
That large sum can be assembled only with the direct, active and immediate support of the Bush administration, working with the International Monetary Fund and other governments and public and private financial institutions. One reason to assemble the large sum is to deter a worse panic.
Why should the U.S. government help soften Argentina's difficult landing? During the 1990s, Republican and Democratic administrations actively pursued the twin goals of democracy and economic integration in the Americas. Those goals are now imperiled. Argentina's further collapse would directly or indirectly damage other South American economies, provoking cumulative financial panics. And the breakdown of one of the region's largest democracies would undermine two decades of gains across the hemisphere.
Only two decades ago, dictatorship, not democracy, dominated much of Latin America. Argentina suffered six military coups between 1930 and 1976.
Since 1983, Argentines have put political violence and instability behind them. Presidents are now regularly and freely elected, and power has passed peacefully several times from government to opposition. Civil liberties are now widely respected, and the country possesses a vibrant free press and civil society.
The current crisis threatens to undo these democratic gains. After four years of recession, Argentines are beginning to lose hope. Trust in government has eroded. Many citizens no longer believe their elected leaders are able to address their most pressing problems.
The de la Rúa 2-year-old government suffered such a dramatic loss of support because it was increasingly perceived to be sacrificing its citizens' well-being to meet the demands of financial markets. In his wake, Rodríguez Saá's grace period lasted only a week.
The danger today is that frustration has spread to include the entire political elite, and perhaps even Argentina's political institutions—patterns similar to those that gave rise to Alberto Fujimori in Peru and Hugo Chávez in Venezuela. If that occurs, the prospects for democracy will dim considerably.
It has not come to that yet. Neither de la Rúa's or Rodríguez Saá's resignation was a military coup, and no Argentine Hugo Chávez has yet emerged. No one doubts that the election to choose de la Rúa's successor will be free and fair. But if Argentina is to steer clear of a Venezuela-like fate, its new government must deliver economic solutions to Argentines. To do so, it will require external assistance.
A successful model of such U.S.-backed support was tested in Mexico. The U.S. government's decision to organize a financial assistance package to help Mexico address the 1994-95 financial panic was bold and politically risky. But it clearly worked. A worse panic was deterred, economic growth was soon restored and Mexico made an impressive transition to democracy.
Argentina deserves similar help. Few, if any, Latin American countries combined democracy and market reforms as successfully as Argentina did in the 1990s.
Argentine democracy has proven remarkably resilient, weathering hyperinflation and radical economic reform. But if something is not done soon to give Argentines a realistic expectation that their politicians and democratic institutions can provide solutions to their problems, someone else will try to convince them that those politicians and those institutions are themselves the problem.
If that happens, U.S. interests will suffer badly in Argentina and elsewhere in the Americas.
Mediators are often thought to be more effective if they are unbiased, or have no preferences over the issue in dispute. This paper presents a game theoretic model of mediation drawing on the theory of "cheap talk" which highlights a contrary logic. Conflict arises in bargaining games because of uncertainty about the resolve of the parties. A mediator can reduce the likelihood of conflict by providing information on this score. For a mediator to be effective, however, the parties must believe that the mediator is telling the truth, especially if the mediator counsels one side not to make a large demand because their opponent has high resolve and will fight. An unbiased mediator who is simply interested in minimizing the probability of war will have a strong incentive to make such statements even if they are not true, hence the parties will not find the mediator credible. Only a mediator who is effectively "on your side" will be believed if they counsel restraint. Parties will accept mediators who are biased against them if there are social norms which imply that rejecting mediation is a sign of weakness and something to hide, rather than of strength. There is a social benefit to promulgating such norms, because of the loss involved in letting conflicts go unmediated.
With the fall of the Soviet Union and the acceleration of global economic, political, and social pressures, Mexico, Central, and South America have undergone vast transformations. This collection details these changes and updates the scholarship on a region once defined by the cold war and now struggling to define itself within the era of economic globalization and democratization. Rapid changes in the area have produced new and contentious scholarship, the best of which is contained in this new five-volume set. Collected by one of the premiere authorities on the region, each volume contains a valuable introduction and considers a key discipline of study.
The indigenous people of the hemisphere have resisted a five-hundred-year assault, fighting to maintain their cultural identities. During this time, authorities in the Americas have insisted that the toleration of indigenous societies and cultures would undermine their respective states. In recent years, however, the nations of the Americas have started to reverse themselves. They are altering their constitutions and proclaiming themselves multiethnic. Why is this happening now? The Politics of Ethnicity: Indigenous Peoples in Latin American States, edited by David Maybury-Lewis, helps us understand the reasons and history behind these times of transition.
The book provides a valuable overview of current problems facing indigenous peoples in their relation with national states in Latin America, from the highlands of Mexico to the jungles of Brazil. The traditional, sometimes centuries old, relations between states and indigenous peoples are now changing and being rediscussed. The collection, authored by U.S. and Latin American anthropologists using interdisciplinary approaches, enables the reader to understand these recent developments in a comparative framework. An ambitious and quite thorough collection, it is brought together skillfully by one of the discipline's greatest thinkers.
A comprehensive look at the global movements that are transforming international relations.
From the earliest campaign against Augusto Pinochet's repressive practices to the recent massive demonstrations against the World Trade Organization, transnational collective action involving nongovernmental organizations has been restructuring politics and changing the world. Ranging from Santiago to Seattle and covering more than twenty-five years of transnational advocacy, the essays in Restructuring World Politics offer a clear, richly nuanced picture of this process and its far-reaching implications in an increasingly globalized political economy. The book brings together scholars, activists, and policy makers to show how such advocacy addresses-and reshapes-key issues in the areas of labor, human rights, gender justice, democratization, and sustainable development throughout the world.
A primary goal of transnational advocacy is to create, strengthen, implement, and monitor international norms. How transnational networks go about doing this, why and when they succeed, and what problems and complications they face are the main themes of this book. Looking at a wide range of cases where nongovernmental actors attempt to change norms and the practices of states, international organizations, and firms in the private sector—from debt restructuring to protecting human rights, from anti-dam projects in India to the pro-democracy movement in Indonesia—the authors compellingly depict international nongovernmental organizations and transnational social movements as considerable, emerging powers in international politics, initiating, facilitating, and directing the transformation of global norms and practices.
In this ambitious book Eva Bellin examines the dynamics of democratization in late-developing countries where the process has stalled. Bellin focuses on the pivotal role of social forces and particularly the reluctance of capital and labor to champion democratic transition, contrary to the expectations of political economists versed in earlier transitions. Bellin argues that the special conditions of late development, most notably the political paradoxes created by state sponsorship, fatally limit class commitment to democracy. In many developing countries, she contends, those who are empowered by capitalist industrialization become the allies of authoritarianism rather than the agents of democratic reform.
Bellin generates her propositions from close study of a singular case of stalled democracy: Tunisia. Capital and labor's complicity in authoritarian relapse in that country poses a puzzle. The author's explanation of that case is made more general through comparison with the cases of other countries, including Mexico, Indonesia, South Korea, Turkey, and Egypt. Stalled Democracy also explores the transformative capacity of state-sponsored industrialization. By drawing on a range of real-world examples, Bellin illustrates the ability of developing countries to reconfigure state-society relations, redistribute power more evenly in society, and erode the peremptory power of the authoritarian state, even where democracy is stalled.
Eva Bellin is an associate professor at Hunter College and was a faculty associate of the Weatherhead Center for International Affairs.
Predicting the future is notoriously difficult. But systematic analysis leads to clearer understanding and wiser decisions. Thinking about the future also makes social scientists focus their research into the past and present more fruitfully, with more attention to key predictors of change.
This book considers how we might think intelligently about the future. Taking different methodological approaches, well-known specialists forecast likely future developments and trends in human life. The questions they address include: How many humans will there be? Will there be enough energy? How will climate change affect our lives? What patterns of work will exist? How will government work at the local, national, and world level? Will inflation remain under control? Why have past forecasts been so bad? The book concludes with a discussion of the intellectual and historical context of futurology and a look at the accuracy of predictions that were made for the year 2000.
In Sven Steinmo and Bo Rothstein eds. Institutionalism and Welfare Reforms (Palgrave 2002)
During the 1990s, Japan simultaneously expanded and cut benefits in different programs. In doing so, the Japanese case casts doubts upon facile assumption that the welfare state goes through separate phases of expansion and retrenchment. What seems to be happening in Japan is an overall reshuffling of costs and benefits within the welfare state.
Welfare reforms are difficult, because, as Esping–Andersen (1996) and Pierson (1994) have pointed out, welfare states produce groups with stakes in the status quo. Some institutions, however, make it easier to reform the welfare state (cf. Bonoli 2000: Bonoli and Palier 2000; Pierson ed. 2001). Visser and Hemerijick (1997), for instance, show how the Dutch transformed their welfare state by drawing upon a corporatist social partnership. I look at the noncorporatist country, Japan, to examine why some reforms were possible and some not.
We develop an equilibrium model of industrial structure in which the organization of firms is endogenous. Differentiated consumer products can be produced either by vertically integrated firms or by pairs of specialized companies. Production of each variety of consumer good requires a unique, specialized component. Vertically integrated firms can manufacture the components the need in the quantity and type that maximizes profits, but they face a relatively high cost of governance. Specialized firms can produce at lower cost, but input suppliers face a potential hold–up problem. We study the equilibrium mode of organization when inputs are fully or partially specialized. We consider how the degree of competition in the market and other parameters affect the equilibrium choices, and how the equilibrium compares with the efficient allocation.
This paper is a comparison across time of the two great waves of immigration to New York City in the last hundred years: the first wave, between 1880 and 1920, brought hundreds of thousands of eastern Europeans and southern Italians to the city; the recent influx of Asians, Latin Americans, and Caribbeans began in the 1960s and is still going strong. In the first wave, the African American community was insignificant, and the total black population did not even reach a hundred thousand. By time of the second wave, the city had been on the receiving end of a massive flow of African Americans from the South that began around World War I and continued until the 1960s.
We argue that their exist three initial sending regions, India, China, and Hong–Kong (SAR) and two possible receiving regions, an entrepot destination (Canada–Europe) and the ROW (USA). The home destination is of course the original sending country.Furthermore, we argue that three options or types of movement exist for each emigrant after the initial move to the entrepot country in two separate periods. These options include staying in the new entrepot country (Canada), returning to the origin country or sojourning on to a third country (ROW). In addition, multiple permutations over these types of immigrant movements can arise and complex patterns appear which will now blur the traditional categories of temporary (less than one year) and permanent movers.
Since the late 1990s, the relative weight of ultra–nationalist parties in Russian parliamentary and extra–parliamentary politics has, after reaching a certain peak in the mid–1990s, declined. The paper argues that this trend can, for a number of reasons, not be taken as proof for a lasting evaporation of right–wing extremist ideas from high politics in Russia. In particular, parallel developments within the voluntary sector, namely the emergence of a multifaceted uncivil society, suggest that Russian right–wing extremism may currently experience a period of transition rather than decay. The example of the rise of the notorious neo–fascist Alexander Dugin from a lunatic fringe publicist to a highly placed political advisor with close links to both, the legislative and executive branches of the Russian state, in 1998–2001, is used as an illustration that radically anti-Western ideas will continue to have an impact on Russia's elite thinking, and policies.
We analyze two cross–country data sets that contain information on attitudes toward trade as well as a broad range of socio–demographic and other indicators. We find that pro–trade preferences are significantly and robustly correlated with an individual's level of human capital, in the manner predicted by the factor endowments model. Preferences over trade are also correlated with the trade exposure of the sector in which an individual is employed: individuals in non–traded sectors tend to be the most pro–, while individuals in sectors with a revealed comparative disadvantage are the most protectionist. Third, an individual's relative economic status, measured in terms of either relative income within each country or self–expressed social status, has a very strong positive association with pro–trade attitudes. Finally, non–economic determinants, in the form of values, identities, and attachments, play an important role in explaining the variation in preferences over trade. High degrees of neighborhood attachment and nationalism/patriotism are associated with protectionist tendencies, while cosmopolitanism is correlated with pro–trade attitudes. Our framework does a reasonable job of explaining differences across individuals and a fairly good job of explaining differences across countries.
For some years, my colleagues and I have been actively engaged in the development and application of an approach to the resolution of international conflicts for which we use the term ‘interactive problem–solving’. The fullest – indeed, the paradigmatic – application of the approach is represented by problem–solving workshops (Kelman, 1972, 1979, 1992, 1996b; Kelman and Cohen, 1986), although it involves a variety of other activities as well. In fact, I have increasingly come to see interactive problem–solving as an approach to the macro–processes of international conflict resolution, in which problem–solving workshops and similar micro–level activities are integrally related to official diplomacy (Kelman, 1996a).
The approach derives most directly from the work of John Burton (1969, 1979, 1984). While my work follows the general principles laid out by Burton, it has evolved in its own directions, in keeping with my own disciplinary background, my particular style, and the cases on which I have focused my attention. My work has concentrated since 1974 on the Arab–Israeli conflict, and particularly on the Israeli–Palestinian component of that conflict. I have also done some work, however, on the Cyprus conflict and have maintained an active interest in several other intense, protracted identity conflicts at the international or intercommunal level, such as the conflicts in Bosnia, Sri Lanka, and Northern Ireland.
In recent theories of comparative development the role of institutional differences has been crucial. Yet what explains comparative institutional evolution? We investigate this issue by studying the coffee exporting economies of Latin America. While homogeneous in many ways, they experienced radically different paths of economic (and political) development which is conventional traced to the differential organization of the coffee industry. We show that the different forms that the coffee economy took in the 19th century was critically determined by the legal environment determining access to land, and that different laws resulted from differences in the nature of political competition. Our analysis suggests that explanations of institutional differences which stress economic fundamentals can only be part of the story. At least in the economies we study, while geography, factor endowments and technology are clearly important, their implications for the institutional structure and thus development are conditional on the form that political competition takes in society. Endowments are not fate.
CEPR Discussion Papers 3206, Centre for Economic Policy Research, February 2002.
To quantify the implications of common currencies for trade and income, we use data for over 200 countries and dependencies. In our two–stage approach, estimates at the first stage suggest that belonging to a currency union/board triples trade with other currency union members. Moreover, there is no evidence of trade–diversion. Our estimates at the second stage suggest that every one percent increase in a country's overall trade (relative to GDP) raises income per capita by at least one third of a percent. We combine the two estimates to quantify the effect of common currencies on output. Our results support the hypothesis that important beneficial effects of currency unions come through the promotion of trade.
The spectacular gap in incomes that separates the world's rich and poor nations is the central economic fact of our time. Average income in Sierra Leone, which is the poorest country in the world for which we have data, is almost 100 times lower than that in Luxembourg, the world's richest country. Nearly two–thirds of the world's population lives in countries where average income is only one–tenth the U.S. level. Since the starting points for all these countries were not so far apart prior to the industrial revolution, these disparities must be attributed almost entirely to differences in long–term growth rates of per–capita income. The world is split sharply between countries that have managed to sustain economic growth over long periods of time and those that have not. How do we make sense of this?
When taking monetary policy decisions, central banks face considerable uncertainty about the transmission mechanism of monetary policy to the price level. In particular, the role played by monetary developments in the transmission mechanism is not well understood. Two paradigms exist: one assigns monetary developments an entirely passive role; the other gives money an active role, beyond that of an indicator variable. Taking such uncertainty as a starting point for analysis, this paper evaluates a number of monetary policy rules for short–term interest rate decisions in the face of paradigm uncertainty. It describes what constitutes an efficient rule in this context and discusses procedures leading to the adoption of such rules.
The future of dollarization will be determined by political economy considerations. Existing scholarship on the political economy of fixed exchange rates indicates factors of potential importance at both the domestic and international levels. At the domestic level the role of stabilizing currencies to encourage trade, and devaluing for competitive purposes, dominates the politics of these decisions. Greater commercial and financial integration with the United States increase the likelihood of dollarization. Internationally-oriented economic agents (financial institutions, borrowers, international firms) are more likely to want dollarization; tradables producers, especially import competers, are more likely to oppose it.
At the international level, dollarization will implicate regional integration agreements. Countries party to such agreements (such as Mercosur) are more likely to dollarize together than separately. Where such agreements are with the United States, or where they increase the level of commercial and financial integration with the United States, they will also tend to increase the likelihood of dollarization. On the other hand, dollarization is likely to put pressure on countries to harmonize financial regulation with the United States, and to require the implicit or explicit approval of American monetary and financial authorities.
New Crises elsewhere have replaced Afghanistan in the headlines, but this week is an important anniversary.
A year ago on Thursday, Afghan leaders signed the Bonn Agreement, a roadmap to take Afghanistan from the wreckage of years of conflict toward democratic elections in 2004. So it is a good time to ask whether Afghanistan is still important to anyone but the Afghans and whether the Bonn roadmap is steering Afghanistan in the right direction.
The answer to both questions is yes. Until the Taliban fell, Afghanistan gave haven to the world's most dangerous terrorists, who would be quick to return if coalition troops withdrew. They, the drug barons and the warlords, would plunge Afghanistan back into darkness. Sept. 11 showed why the world must work with the Afghans to prevent this and why we should commit ourselves to achieving a universally acceptable vision for Afghanistan: the establishment of a sovereign, stable, and secure country with a self-sustaining economy, strong institutions, and a broad-based, multiethnic regime committed to eradicating terrorism and opium production, reducing poverty, and honoring its international obligations - most notably the human rights of minority groups and women. These aspirations are undeniably ambitious. They should be more easily achievable if we apply three R's to Afghanistan. Not, in this case, the traditional reading, 'riting and 'rithmetic, but realism, respect, and resilience.
Realism reminds us that Afghanistan cannot be magically transformed into a modern democracy. Progress toward anything like it will take time. Meanwhile, holding together the myriad Afghan groups means focusing on the essential and the achievable. This applies even to human rights. Those responsible for past atrocities should be called to account. But not yet. At this stage, Afghanistan's fragile consensus could not survive a comprehensive investigation of past excesses.
Nor, realistically, can all the warlords simply be swept away. Instead, the immediate goal must be to draw them into greater dependence on the Kabul administration, with reconstruction aid for their fiefdoms made conditional on good behavior, and to find other work for their foot soldiers. In time, the nascent national army should outgun the private armies.
Realism also suggests that those still calling for the deployment of large numbers of foreign troops to several Afghan cities should drop the idea. Static foreign garrisons would be expensive and vulnerable targets. The present "light footprint" system, backed by the threat of US air power, has worked well. Developments on that theme, not garrisons, can best help keep the peace in the provinces.
Respect means remembering that Afghanistan belongs to the Afghans. Building Afghan capacity must underpin everything we do. Hence the need to nurture viable Afghan institutions, drawing on Afghanistan's cultural and religious heritage. Hence, too, the importance of eradicating opium production and providing alternative livelihoods for farmers. If the rule of law does not prevail, Afghanistan—and we—will fail.
Resilience, in terms of commitment and stamina, will be needed to overcome the many daunting challenges we will continue to face. The international community moved Afghanistan from the top of the "in" basket to the "too difficult" basket after the Soviet occupiers left. Warlords, Taliban, and Al Qaeda took advantage. Whatever difficulties and distractions surface now, we must not snatch defeat from victory by abandoning the Afghans again.
The solutions we develop must also be resilient. Regional neighbors like Pakistan and Iran now tacitly accept the unacceptable—the presence of Western forces—to underwrite peace in Afghanistan. The West, in turn, must accept that Afghanistan's neighbors should be involved in finding solutions, not dismissed as part of the problem. An imperial outpost in Afghanistan in the face of regional hostility isn't a long-term solution. Ask the British. Ask the Russians.
The Afghans and the international community can be proud of what has been achieved in Afghanistan in the last year, with progress in bringing relative stability and normality to daily life, delivering humanitarian aid, providing education and health care, and removing land mines. The return of so many refugees testifies to that success. But Afghanistan is still fragile, and nobody can be complacent about the size of the task ahead. Realism, respect, and resilience are three essential tools if we are to do the job right. It is in our own interests, as well as those of the Afghans, that we should.