The Outlook for Central and South America

The Outlook for Central and South America

Andrew’s Note: I’ve been watching with interest the developments in Argentina where the Socialist government has imposed price controls in a futile attempt to control inflation created by social (or should I say Socialist) engineering masquerading as economic policy…President Cristina Fernández de Kirchner’s administration has now gone so far as to ban advertising.  The arrogance of a government expecting private businesses and individuals (and farmers) to continue to produce when their goods cost more to produce than they are allowed to sell them for defies belief…but it wasn’t so long ago that we tried such schemes as well.  During the Nixon administration we exercised price controls on a national level and some cities still cling to anachronistic rent control schemes.  Luckily we no longer impose price controls on a national level…now we just legislate how much profit private industries can make…Lord save us from misguided but well intended politicians and Socialists…so what’s the more general outlook for Central and South America look like…let’s return to the JOE.

The JOE is our crystal ball…or at least the closest thing that the Department of Defense (DOD) has to it…namely the Joint Operating Environment (JOE) 2010. The JOE is the DOD’s keystone document used to project the world in which it will operate up to 25 years into the future.  As I’ve mentioned previously, it’s a sobering read for the prepper and likely to turn the non-prepper into one.  Read on to learn what the Department of Defense thinks about the outlook for Central and South America:

Outlook for Central and South America

Military challenges in South America and Central America will likely arise from within states, rather than between them.  Many internal stresses will continue to challenge the continent, particularly drug cartels and criminal gangs, while terrorist organizations will continue to find a home in some of the continent’s lawless border regions.  The power of criminal gangs fueled by drug money may be the primary impediment to economic growth, social progress, and perhaps even political stability and legitimacy in portions of Latin America.  The cartels work to undermine and corrupt the state, bending security and legal structures to their will, while distorting and damaging the overall economic potential of the region.  That criminal organizations and cartels are capable of leveraging expensive technologies to smuggle illicit drugs across national borders serves to illustrate the formidable resources that these groups can bring to bear.  Taking advantage of open trade and finance regimes and global communications technologies, these groups attempt to carve out spaces free from government control and present a real threat to the national security interests of our friends and allies in the Western Hemisphere.

Colombia’s success against the FARC, drug cartels, and paramilitary death squads is notable.  The assault by the drug cartels on the Mexican government and its authority over the past several years has also recently come into focus, and reminds one how critical stability in Mexico is for the security of the United States and indeed the entire region.  Mexico has the 14th largest economy on Earth, significant natural resources, a growing industrial base, and nearly free access to the biggest export market in the world immediately to its north.

The U.S.  and Mexico must continue to cooperate to cut off the shipment of drugs into the United States and the flow of weapons and bulk cash into Mexico.  In addition to conventional bank transfers, syndicates import between $8 billion and $10 billion in bulk cash each year.  As traditional land routes for smuggling drugs into the US have been shut down, in most of the US there has been an increase in drug price and a decrease in drug purity but as in any conflict, the enemy has adapted, and now the maritime routes have become critical to smugglers.  For Mexico the end game is based on:

  • Mitigating the violence
  • Changing the problem back from a national security problem to public security, law and order problem
  • Raising the opportunity costs of doing drug business in Mexico

As Mexico becomes successful, the drug problem will expand into a greater regional problem, so a holistic approach is needed.  The economics are shifting as well, with the United Kingdom and Spain now the most lucrative markets and the problem spilling into Japan, Russia, and China.

The Mexican government will remain severely challenged as its primary focus is its fight against these formidable non-state groups.  A continuous cooperative effort by the U.S.  to both minimize demand for illicit drugs and to defeat criminal elements involved within its borders will be pivotal to Mexico’s success in confronting lawlessness and corruption.

South America’s improving economic situation suggests that the region could be in a better position to deal with these problems.

Brazil, in particular, appears set on a course that could make it a major player among the great powers by the 2030s.  Visionary investments in biofuels as well as the discovery of massive oil deposits off the Brazilian coast will increase its energy independence, while a growing industrial and service-based economy mean that the next several decades will see Brazil’s economic and political power grow.  Chile, Argentina, Peru and possibly Colombia will also most likely see sustained growth, if they can continue prudent economic policies in the face of the difficult economic headwinds of the global financial crisis.

The potential major challenges to the status quo at present are Cuba and Venezuela.  The demise of the Castros will create the possibility of major changes in Cuba’s politics.  The future of Venezuela is harder to read.  The Chavez regime is diverting substantial amounts of its oil revenues to further its anti-American “Bolivarian Revolution,” while at the same time consolidating his regime’s hold on power by distributing oil wealth to his supporters.  By trying to do both, it is shortchanging investments in its oil infrastructure which have serious implications for the future.  Unless Venezuela’s current regime changes direction, it could use its oil wealth to subvert its neighbors for an extended period while pursuing anti-American activities on a global scale with the likes of Iran, Russia, and China, in effect creating opportunities to form anti-American coalitions in the region.

Joint Operating Environment 2010About the Study: The Joint Operating Environment is intended to inform joint concept development and experimentation throughout the Department of Defense. It provides a perspective on future trends, shocks, contexts, and implications for future joint force commanders and other leaders and professionals in the national security field. This document is speculative in nature and does not suppose to predict what will happen in the next twenty-five years. Rather, it is intended to serve as a starting point for discussions about the future security environment at the operational level of war.

Distribution Statement: Approved for Public Release

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