South America

Latin America in a Time of Enlightenment

By Derek Sambrook, FIB (SA), TEP, Managing Director, Trust Services SA, Panama (01/04/2015)

I am writing this article during March which Emily Dickinson, America’s 19th-century reclusive poet, said was the month of expectation.  What should we expect in relation to Latin America?

Earlier this month I was chairing a financial services conference in Panama, the location of which afforded a panoramic view of Panama Bay and the scattered islands beyond, and it seemed to me that, as the English poet, Robert Browning, put it:  “God’s in His Heaven – All’s right with the world!”  But not for those who inhabit the offshore world, of which Panama is a part, the one which still provides innovative solutions as it gets tangled up in taxes and transparency.

Graucho Marx met regularly at New York’s Algonquin Hotel with a coterie of curmudgeons and he described the gathering thus:  “The admission fee was a viper’s tongue and a half-concealed stiletto.  It was a sort of intellectual slaughterhouse”; their targets included pomposity, incompetence, hypocrisy and pretension.  (I would imagine that the transparency agenda launched by the Organisation for Economic Co-Operation and Development has probably produced a fresh crop of curmudgeons in the last year or so.) 

“Call me old-fashioned” quipped Mick Jagger of the Rolling Stones, “but I don’t think your ex-bank manager should be discussing your financial dealings and personal information in public”.  Mick, it might get worse.  This is not good news for Latin Americans who are especially protective of their private affairs whose culture has an ingrained loathing of exposing both family and business affairs to the glare of the public spotlight. 

What may be acceptable elsewhere is irrelevant.  If Anton Chekhov believed that we have both an open and a secret life, you should not be surprised to learn that Colombia’s Gabriel García Márquez (known as Gabo), Latin America’s Roald Dahl, went further:  “Everyone has three lives.  A public life, a private life and a secret life”. 

Governments should always have access to personal, sensitive information in order to corner criminals and terrorists; in my view, essential client information should be kept by service providers under pain of prosecution.   As for those in the business of sheltering their clients from paying taxes due, they have a future similar to the American whale oil industry in the nineteenth century which supplied, in Herman Melville’s words, “almost all the tapers, lamps and candles that burn around the world”.  They need to adapt, and quickly, as the wise whale merchants did who invested their capital in the new crude oil industry.  Light thereafter came from a new source, and so can business for those playing with fire.

As the costs of compliance with America’s Foreign Account Tax Compliance Act and the OECD drive for both private and business matters to be laid bare to public scrutiny reveal, bureaucrats can and do suffer from tunnel vision.  Repercussions and consequences of policies can seem unimportant and show a level of concern bordering on apathy.

And commenting on the microscopic degree of empathy for the plight of the offshore financial services centres, consider the view once expressed about Latin America.  “Latin America doesn’t exist in US foreign policy”.  So says one of the region’s ambassadors to the United States of America in Washington.  Another Latin American official, referring to meetings of the Organisation of American States, feels that other countries “send good diplomats to the OAS, the US doesn’t”. 

The OAS, which brings together all 35 independent states of the Americas and is the world’s oldest regional organisation dating back, in fact, to the First International Conference of American States held in Washington in October, 1889, and ending in April the following year, even although the OAS itself actually only came into being in 1948. 

The Summit of Expectations

Much has changed since the US claimed almost proprietary rights over the region it once referred to as its backyard.  Regional countries have indeed, at different speeds, and as envisaged by the objectives of the OAS, defended “their sovereignty, their territorial integrity, and their independence.”  An illustration of this occurred last September when Panama’s foreign minister flew to Havana to personally invite Cuban leader Raúl Castro to attend the next Summit of the Americas which is being held in Panama in April.  The same month Panama’s new president, Juan Carlos Varela, stressed at the United Nations in New York that all the hemisphere’s heads of state should attend.  The OAS, a sponsor of the summits, removed Cuba as a member back in 1962 but only Canada and the US still endorse this move.

At the last Summit of the Americas (held every three years) President Obama was verbally pilloried by regional heads of state because of his stance on Cuba; it was even suggested that there should be no further meetings if Cuba was excluded.  Some fancy footwork, however, might solve the stalemate and, at the same time, prove that Latin America in the twenty-first century is unquestionably on Washington’s foreign policy agenda. 

President Barack Obama and Raúl Castro have announced the tentative resumption of diplomatic relations which could mean that the world’s oldest trade embargo might be lifted at some time in the (even if distant) future.  Besides the significant economic impact such a move would have for the island and its 11 million people, it would ease the tensions between Washington and the other OAS members.  

It should be remembered, however, that the US already does export to Cuba in a restricted fashion.  Since 2001 US companies have been able to send agricultural products and the trade has boomed; the US is a major source of grains and other foodstuffs.  Meanwhile, it is China that is Cuba’s biggest market as well as its main supplier of goods.  Venezuela is, predictably, an important trading partner also, due to the legacy of Hugo Chávez, and still accounts for 40 per cent of total Cuban trade.  And because of the absence of US competition, Canadian and European countries (especially Spain, the former colonial master) have benefited. 

Even if the embargo does not go up in smoke, there’s a lot more of it expected to be generated by Cuba:  if all goes well, President Obama proposes to allow each US citizen to import Cuban cigars up to a value of US$100 every year.  Conceivably, this could be worth, annually, nearly US100 million to Cuba’s economy.  Spain imported Cuban cigars worth nearly US$86 million in 2013.

Any lessening of the fractious relations between Cuba and the US would be met with outrage and public protest by the hard-right Cuban exiles in Miami, all of a certain age.  I have often written about adjusting to reality and those Miami malcontents need to do so, just like Uruguay’s former President José Mujica (known as Pepe), the late Nobel Laureat, Colombian Gabriel García Márquez (known as Gabo) and Pepe’s fellow countryman, the writer, Eduardo Hughes Galeano.    

Rum and Realism

As I have commented before, each, in his own way, is or was a realist.  Because Gabo befriended Fidel Castro, some saw him as a card-carrying communist.  Although a socialist, he did not see himself as a political creature and once commented that his conversations with the former Cuban president were mostly about literature and cooking.  He was equally at home with powerful international political leaders, such as the late François Mitterrand; former US president, Bill Clinton, called him one of his favourite writers.  This same man, who celebrated the award of a Nobel Prize in literature with a rip-roaring party bolstered by 1,500 bottles of rum courtesy of Fidel Castro, used his new-found influence to intercede on behalf of jailed dissidents and readily attacked any suppression of freedom of speech.  As for Fidel Castro’s acolyte, the late Hugo Chávez, he spoke of him as being two men:  “One to whom the caprices of fate had given an opportunity to save his country.  The other, an illusionist, who could pass into the history books as just another despot”.

Pepe and Mr Galeano have experienced a rebirth, and both have consigned their bitterness, if not its taste, to the bin.  The Uruguayan president will become a senator in the new parliament following Tabaré Vásquez’s triumph in the country’s presidential elections last November and he is certain to be a moderating influence shaped by experience which, as Albert Camus said, has to be lived.

In December last year, four Syrians, a Tunisian and a Palestinian, all released from Guantánamo Bay, being former terrorist suspects held since 2002 but never charged, were given sanctuary in Uruguay.   They are the first detainees sent to South America but indications are that they may not be the last as other countries in the region look on.  This humanitarian act by the president displayed his fully-ripened maturity.

In the same way, José Mujica has handled the Falkland Islands’ sovereignty issue with equanimity.  The islands which are claimed by Britain (historically they have also been settled by France and Spain) were unsuccessfully invaded in 1982 by Argentina.  Whereas most of Argentina’s neighbours have zigzagged ever since around the sovereignty struggle, Uruguay’s president has encouraged business with the islands; he recognises Argentina’s “historic rights” but he is against isolating people because “doing that commercially achieves nothing”.

Mr Galeano, the enigmatic and playful Uruguayan writer, believes that journalism woke him up to the realities of the world (Gabo referred to it as “the greatest profession in the world”.)  Mario Puente, from Argentina, however, was woken up differently and, he says he was, “scarred for life”, when he fought in the Falklands as an 18-year old marine.  He ran in a marathon there thirty years later, wearing a T-shirt with Argentina’s blue-and-white flag on one half and the Union Jack on the other and he says that his government has made the situation worse, in diplomatic terms, by reckless rhetoric.  “You get further with seduction than confrontation”, he says, adding, “You can’t keep quarrelling for 30 years.  One day you have to shake hands”.  Fine sentiments in the case of Cuba too.  The word for bridge in Spanish is the same as the marathon runner’s surname.  A bridge is just what is needed.

In December, 2013, presidents Obama and Castro shook hands at Nelson Mandela’s official memorial service and perhaps in April they will do so again in Panama at the Summit of the Americas.  It certainly would be a remarkable event, although Gabo thought that to anyone living in a continent of such extremes, extraordinary events could often seem quite ordinary.  The US president once described Gabo as one of the world’s “greatest visionary writers.”  Perhaps his own vision has improved.