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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China Wins if NAFTA Dies

by Shannon K. O'Neil
Mexico's President Enrique Pena Nieto (R) shakes hands with China's President Xi Jinping during a news conference at Los Pinos Presidential Palace in Mexico City June 4, 2013. Xi is on a three-day official visit to Mexico (Edgard Garrido/Reuters).

Much is made of the perils of ending NAFTA for Mexico, and rightly so. The 23-year-old agreement has helped the nation not only boost trade but also transform its economy, moving from a commodity to an advanced manufacturing exporter. With 80 percent of its exports headed north, even the threat of change has hurt Mexico’s currency, limited its ability to attract foreign direct investment, and cut the country’s current and future economic growth. Read more »

Automation is Changing Latin America Too

by Shannon K. O'Neil
Robots assemble a car at Ford Motor Company factory in Camacari, in the northeastern Brazilian state of Bahia, November 14, 2007. Ford invested US $1.2 billion at the Camacari's factory and created a unique environment that consolidates production line with their direct suppliers' own facilities where the models are made for the Brazilian market and exported to other in development countries as well (Paulo Whitaker/Reuters).

While politicians have focused primarily on the effects of trade, automation is rapidly transforming the nature of work. A recent McKinsey report estimates that half of the labor done today can be turned over to machines, fundamentally changing the nature of manufacturing, retail, food services, and data processing among other sectors. They predict that China, India, the United States, and Japan will see the largest and fastest shifts as a combination of easy capital, aging populations, and falling productivity speeds the transition away from a human workforce. By their calculations, nearly 400 million Chinese and 235 million Indian workers compete with robots today. In the United States and Japan, some 60 percent of jobs are susceptible to change. Although positions may not disappear altogether, the work people do will change, as roughly a third of today’s repetitive tasks could be taken over by machines. Read more »

Venezuela: Options for U.S. Policy

by Shannon K. O'Neil
Courtesy Kaveh Sardari

This morning, I had the privilege of testifying before the U.S. Senate Committee on Foreign Relations at a hearing titled “Venezuela: Options for U.S. Policy.” Also joining me before the committee were David Smilde, Senior Fellow, Washington Office on Latin America, and Mark Feierstein, Senior Associate, Americas Program Center for Strategic and International Studies. Read more »

Why Argentina’s Macri Could Have a Rockier Year in 2017

by Shannon K. O'Neil
Argentine President Mauricio Macri gestures during a news conference at the Casa Rosada Presidential Palace in Buenos Aires, Argentina, January 17, 2017 (Reuters/Marcos Brindicci). Argentine President Mauricio Macri gestures during a news conference at the Casa Rosada Presidential Palace in Buenos Aires, Argentina, January 17, 2017 (Reuters/Marcos Brindicci).

Argentine President Mauricio Macri and his team can take a bow for their first year in office. Despite Macri’s outsider status and his party’s limited influence in the Congress, he in short order took on the country’s biggest economic distortions—unifying the exchange rate, resolving the fight with international creditors, cutting energy subsidies, reestablishing credible statistics, and eliminating a whole host of tariffs, quotas, and export licenses. Read more »

Trump Won’t Stop Investment in Mexico

by Shannon K. O'Neil
A general view shows the General Motors assembly plant in Ramos Arizpe, in Coahuila state, Mexico January 4, 2017 (Reuters/Daniel Becerril). A general view shows the General Motors assembly plant in Ramos Arizpe, in Coahuila state, Mexico January 4, 2017 (Reuters/Daniel Becerril).

NAFTA is as much an investment as a trade treaty, providing guarantees of international courts, regulatory coordination, and intellectual property protections. This has helped bring over $500 billion in foreign direct investment (FDI) to Mexico over the last twenty-three years. This investment has mostly come from the United States, going into manufacturing, financial services, and mining. Read more »

The Odebrecht Settlement and the Costs of Corruption

by Matthew Taylor
A sign of the Odebrecht SA construction conglomerate is pictured in Rio de Janeiro, Brazil, February 26, 2016 (Reuters/Ricardo Moraes). A sign of the Odebrecht SA construction conglomerate is pictured in Rio de Janeiro, Brazil, February 26, 2016 (Reuters/Ricardo Moraes).

It is hard to overstate the meaning of the settlement announced by U.S. authorities on December 21 with Odebrecht. Under this “largest-ever global foreign bribery resolution,”[1] the construction giant and its petrochemical subsidiary Braskem have agreed to pay at least $3.5 billion to Brazil, U.S. authorities, and the Swiss Office of the Attorney General. Of the total criminal fines, 80 percent of Odebrecht’s payments and 70 percent of Braskem’s payments will go to Brazil, a victory for both Brazilian prosecutors and for the cash-strapped Brazilian government. Read more »

Latin America’s Wide-Open Electoral Season

by Matthew Taylor
July 28, 2016 (Reuters/Guadalupe Pardo). July 28, 2016 (Reuters/Guadalupe Pardo).

Half of the eighteen nations of Central and South America will hold presidential elections over the next two years.[1] The number of elections is not unprecedented, but the degree of uncertainty is, given the economic doldrums and political crises that have afflicted the region in recent years. As a consequence of the electoral outlook’s uncertainty, many of the coming year’s events in Latin America will need to be interpreted through the peculiar lens of candidates’ strategic calculations and parties’ maneuvering for advantage at the polls. Read more »

Michel Temer’s Shrinking Presidency

by Matthew Taylor
Brazil, president, Lava Jato, PMDB, Michel Temer, corruption, anticorruption reforms, Geddel Vieira Lima Brazil's President Michel Temer looks on during a news conference at the Planalto Palace in Brasilia, Brazil, November 27, 2016 (Reuters/Ueslei Marcelino).

When he officially became president three months ago, Michel Temer’s game plan was simple and bold: in the roughly eighteen months before the 2018 presidential campaign ramped up, he would undertake a variety of legislative reforms that would put the government’s accounts back on track, enhance investor confidence, stimulate an economic recovery, and possibly set the stage for a center-right presidential bid (if not by Temer himself, at least by a close ally). Temer’s band of advisors—Brazilian Democratic Movement Party (PMDB) stalwarts and long-time Brasília hands Romero Jucá, Geddel Vieira Lima, Eliseu Padilha, and Moreira Franco—would ensure that he had the backing of Congress to push through reforms that might not bring immediate returns, but nonetheless might improve investor confidence, prompting new investments in the short term. Sotto voce, many politicians also assumed that the PMDB—which has been an integral player in every government since the return to democracy in 1985—would be well placed to slow the pace of the bloodletting occasioned by the massive Lava Jato investigation and stabilize the political system. Read more »

The Hidden Refugee Crisis in the Western Hemisphere

by Shannon K. O'Neil
Haitians migrants wait to make their way to the U.S. and seek asylum at the San Ysidro Port of Entry in Tijuana, Mexico, July 15, 2016 (Reuters/Jorge Duenes).

While much attention is rightly focused on Syria and the Middle East, there are a growing number of refugees in the Western Hemisphere.

The largest group comes from Central America’s Northern Triangle—Guatemala, El Salvador, and Honduras. For each of the past three years between 300,000 and 450,000 Central Americans have fled north. Of these, between 45,000 and 75,000 are unaccompanied children; another 120,000 to 180,000 families (usually a mother with children); and between 130,000 to 200,000 single adults. These numbers peaked in May and June 2014 when more than 8,000 unaccompanied minors crossed the U.S. border each month. 2016 numbers are again rising, with August inflows higher than ever before. Read more »