Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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How the U.S. Sequester Will Hit Latin America

by Shannon K. O'Neil
February 27, 2013

Transportation Security Agency (TSA) officers work at Washington's Reagan National Airport outside Washington, February 25, 2013 (Larry Downing/Courtesy Reuters). Transportation Security Agency (TSA) officers work at Washington's Reagan National Airport outside Washington, February 25, 2013 (Larry Downing/Courtesy Reuters).

With the United States quickly approaching its Friday sequester deadline, the federal government is bracing for cuts. Much of the $85 billion in spending cuts will hit domestic programs and services—everything from wildlife reserves to childcare services. But the reverberations will also be felt in Latin America and the rest of the world.

Tourists and immigrants will likely feel the most immediate effects. Smaller consulate and customs budgets will mean longer lines and turn-around times for visas, as well as lengthier security screening waits at the airport. Some immigrants already in the United States have already been affected, as over the past few weeks hundreds of non violent illegal immigrants were released from jails (although they remain under close prison supervision) as officials looked for ways to save soon-to-be scarcer resources.

Foreign governments will also feel the sequester pinch, as security assistance flows take a hit. Needing to cut some $500 million in worldwide security aid to meet the new budget terms, Secretary of State John Kerry has specifically mentioned that funds destined for disrupting drug networks in Mexico, Central America, and the Caribbean will be some of the most severely hit.

On a more macro level, Latin America’s economies may be adversely affected. Economists predict that half a point of growth will be shaved off the U.S. economy due to the cuts. Particularly for those countries most closely tied to the United States—Mexico especially, but also most other countries in Central America and the Caribbean—declining American demand could have big consequences. A January 2013 World Bank report estimates that Latin America’s total GDP growth could be reduced by 1.2 percent as a result of the United States’ fiscal uncertainty.

The full effects of sequestration will become apparent in the weeks after the cuts go into effect, but one thing is for sure—they won’t only be the United States’ problem.

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