The Declining Power of the U.S. in the Americas

This weekend I took part in a K-12 Educators session on Latin America, which the World Affair’s Council organized at Lewis and Clark College. It was an impressive event, which included music and dance exhibitions, as well as breakout sessions on a wide array of topics. I had been asked to present on Brazil. Given that I had an hour, and wanted to leave fifteen minutes for discussion and questions, what could I say to K-12 educators that would be meaningful? What I finally decided to do was to talk first about Brazil’s history for about twenty minutes, and then consider how Brazil’s rapid economic growth is giving its political leadership a chance to address these legacies. As always happens, the best part of the session was the time at the end when I had a chance to talk to the group, which included people from Panama and Peru. And during that conversation I realized that I could have organized the session in another way. I believe that the most important political and economic trend in South America is the waning influence of the United States. And this is a trend not only in the southern hemisphere but also throughout the Americas, as an article about Canada’s trade in today’s Wall Street Journal makes clear.

There are multiple reasons for the waning power of the United States. The financial crisis has taken a heavy toll on the United States, even though it is doing much better than Europe. Many Latin American countries have enjoyed years of rapid growth. This is true for as diverse a range of countries as Argentina, Chile, Panama and Peru, which largely escaped the financial crisis. Colombia is experiencing a rapid oil boom, while Venezuela still holds immense petroleum reserves, despite all of its political travails. China’s rapid growth and insatiable demand for natural resources have given the region a strategic alternative to the United States. And Brazil has enjoyed macroeconomic stability and sustained growth. Even at the start of the millenium its economy accounted for half the economic wealth of South America. But it has seen sustained growth since then, despite a recent slowdown. As some of the people at my session noted, there is uneasiness amongst Brazil’s neighbors –particularly Bolivia- about the scale of Brazil’s investment. The ring of dams that Brazil is building around the Amazon is raising political and environmental issues throughout Amazonia. But with the discovery of the Tupi oil fields, Brazil will become a major oil exporter, and will only have more power on the global stage. Because of Brazil’s historic and linguistic ties with Africa, it does not only focus on Latin America in its foreign policy. But it has become an economic behemoth –its GDP just surpassed that of the United Kingdom this year- with the power to counterbalance the United States in the region.

A similar process is taking place in Canada, which largely escaped the devastation of the financial crisis because of its well-regulated banking system. Canada’s political leadership, however, worried about the country’s long-standing reliance upon the United States for trade. Prime Minister Stephen Harper traveled to Latin America in August 2011, where his trip began in Brazil, the new regional power. Harper made polite comments about recognizing that the U.S. would remain Canada’s key trading partner. But the motivation for his trip was obvious. I’ve already discussed the Keystone XL pipeline debate in this blog. While there were good reasons for the U.S. to delay approval, in the minds of Canada’s economic and political elites this decision has strengthened the arguments for increasing trade with China. This desire is driving not only the Northern Gateway pipeline to the Pacific Ocean, but also a broader trading strategy. And it’s working. As today’s article in the Wall Street Journal shows, the Pacific Rim has now caught up to the United States as an export destination in the Western province of British Columbia. The economic center of Canada is shifting to the West, and this region increasingly looks to China.

People have been predicting that the United States’ economic decline would alter the world order since Paul Kennedy wrote The Rise and Fall of the Great Powers in the 1980s. Still, I would suggest that trends in the Americas would suggest that this time the shifts are real and enduring. It is not that the U.S. has entered into a precipitous decline. Instead, rapid growth in other world regions has combined with slow growth in the United States to shift the balance of power. From Australia to Brazil, China has emerged as a viable economic alternative to the United States. And two wars have distracted the U.S. from the Americas, while bleeding the treasury white. With the financial crisis, the U.S. is focused less on trade and growth, and more on the weaknesses of its financial system. Neoliberalism is discredited as an economic policy, which has reduced the United States’ ideological and political influence. In this context, nations in the Americas are searching for other economic partners, and adjusting to a world in which the U.S. is still relevant, but no longer central. I believe that this is the largest foreign policy event since the collapse of the Soviet Union, although it has attracted much less attention than other issues, such as the War on Terror.

Shawn Smallman, Portland State University

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