Cuba and the Great Game
There is a great game playing out in Latin America and the United States is sitting on the sidelines. On one side is Venezuela's Chavez, Bolivia's Morales, and Ecuador' Correa. On the other is Brazil's Lula, Colombia's Uribe, and Mexico's Calderon. The game is, at its heart, about the future of Latin America and its role in the world. But the road to decisive regional influence leads through Cuba and the U.S. embargo is tying Washington's hands.
Cuba is, essentially, up for grabs. Both sides in this contest are wooing the island nation of 11 million people with economic packages. Chavez continues to sweeten his grand barter of oil for doctors with deals like today's oil refinery announcement and internet access deals.
For now, the Andean Axis is being balanced, serviceably, by Lula's billion dollar trip in February, and Calderon's warming of relations with Havana. Uribe, of course, is balancing the Bolivarian surge by his own more effective FARC counterinsurgency.
Like Yugoslavia in the Cold War, Cuba does not have to choose sides and may be able to continue playing both sides off each other in an effort to diversify its aid portfolio in anticipation of continued and expanded Chinese interest in the island nation and its mineral resources. As long as Chavez needs the doctors and nurses of the Cuban medical corps to deliver his social program, Chavez will have ability to use the oil weapon against Havana.
America has a real interest in the outcome of this contest. At present, more than 30% of U.S. oil imports come from Latin America. U.S. exports to this region are almost five times what we send to China. How these emerging markets evolve will have a large impact on U.S. economic health. Combined with 15% of Americans being of Latino ancestry, Congress should be more and more up in arms about a policy that is emperiling the region.
In the long-term, however, we need Latin America aligned with the United States in the coming contest of economic visions. China is in the midst of the largest urbanization program ever undertaken and to succeed it will need all the natural resources Latin America can exploit. Left alone, a business as usual urbanization scenario will, as McKinsey says, put unprecedented stress on global energy and resource commodities. I think it could crash the system.
The United States is the only country that can effectively re-direct China's growth path toward sustainability, but only if we commit to it in a grand strategy supported by the great majority of the international community. Latin America has to be part of that alliance and, even more important it will have to put its own, sustainable economic growth ahead of exports.
Given the track record of the region, however, it seems likely that Latin American countries, lacking a clear pathway to sustainable growth, will take the commodity cash and fork over their patrimony. That, of course, is a recipe for more of the resource curse, more economic refugees, and more immigration problems here.
Cuba is pivotal. It has the regional respect and the education and scientific capacity to be a powerful role model. It could, as I wrote before, take bold steps to leap frog to the next economy. It could align with Brazil and Mexico and end the dalliance with authoritarian socialism. But if Havana is stuck in Yugoslavia mode, surviving not though economic vitality but through taking strategic rents, as it is today, or if Cuba reverts back to its revolutionary glory days and subordinates itself to Chavez, China will be able to continue its ravenous commodity extraction of the region.
Let's hope the next President of the United States understands just what is at stake and makes Cuba more than just a South Florida thing.