Latin America: Violence and Possibilities
People stand near bullet casings at a crime scene after a shootout in Veracruz, Mexico. Latin America is grappling with a record murder rate.
As many of you know, I’ve spent much of my life in Latin America. So far in 2024, I’ve visited five Central and South American countries and one in the Caribbean. To my dismay, I find that violence has reached horrible and unprecedented levels throughout the region. This is the result of growing poverty and drug trafficking and the relationship between the two. Desperation to escape those conditions is one of the main driving forces behind the flood of immigrants into the United States. I lead small groups of people from the US, Europe, and elsewhere to some of these countries and feel we are very safe; the violence revolves around the drug business. In fact, I suspect we may be safer there, considering the indiscriminate public shootings we experience in the US. However, it is important for us to understand the very significant roles US and European government policies, our own demand for illicit drugs, and lifestyle expectations play in creating this problem that impacts us all.
First, a few facts:
Today, Latin America is the most violent region in the world, with combined crime rates more than triple the world average and comparable to rates in nations experiencing war;
Violence is taking a huge toll on development in the region by affecting economic growth and public faith in democracy;
There is a strong correlation between drug-related crime and income inequality; and—
Countries that have traditionally enjoyed low rates of violence have recently experienced large spikes.
There are two especially significant forces behind crime in Latin America. One of these has mushroomed in recent years: wars between gangs that traffic illegal drugs to the US and Europe which erupted after the peace accord between the Colombian government and FARC and the end of the highly organized Mafia-style cartels.
Illegal drugs in the United States support a black market industry that is estimated to reach as high as $750 billion annually; in the last few years there has been an explosion in this market that has resulted in the largest per person drug usage in US history. The demand for drugs in the US has had an extremely negative impact on just about every country south of the Rio Grande. The sad fact is that Latin American countries that were once considered relatively free of narco-trafficking have now emerged as hubs.
It is ironic that the much-heralded peace accord between the terrorist organization, FARC, and the Colombian government has brought more tranquility to Colombia while at the same time expanding drug trafficking in nearby countries. It is also ironic that the end of the reign of Colombian drug kingpins like Pablo Escobar and their well-disciplined organizations created a “wild west” of violence among competing gangs throughout much of Latin America. Beyond these, there are other factors such as expanded port and other transportation facilities that have enabled the integration of local gangs with transnational organizations, like the Albanian Mafia, and a network of corruption that encompasses US and European immigration and narcotics officials, as well as police and legal systems in the Latin American countries.
It has been estimated by the Inter-American Development Bank that Latin America's GDP per capita would be 25% higher if crime rates were reduced to the world average. Studies by the World Bank indicate a strong correlation between crime and income inequality. As I talk to business and government leaders in Latin America, as well as in the US and Europe, I hear over and over that crime is the number one biggest deterrent to investments and trade and one of the largest factors in the rise of anti-democratic autocrats.
A C-suite officer in a US Fortune 500 company told me, “During these times of conflict between China and the US, we would like to open new production facilities in Mexico and other Latin American countries, but the soaring violence discourages us from doing so.”
Honduras’s recent history offers a classic example of the complex interrelationships between the US, Latin American governments, and the illicit drug business. I wrote extensively in The New Confessions of an Economic Hit Man (the second in the trilogy) that Honduran President Manuel Zelaya was overthrown in a US-supported coup because he defied major American agribusiness and manufacturing corporations by passing land-reform laws that returned land to local farmers and he increased the minimum wage by 60%. He was replaced by a repressive dictator whom Washington depended on to control the drug trade. But as The New York Times reported:
NEW YORK (AP) — Former Honduran President Juan Orlando Hernández was once touted by U.S. authorities as a key ally in the war on drugs. Now, federal prosecutors say the political leader ran his Central American nation as a “narco-state,” collecting millions of dollars from violent cartels to fuel his rise to power. . .
It’s a stunning fall from grace for a political leader long viewed — by Democratic and Republican administrations alike — as beneficial to American interests in the region, including combating the illegal drug trade and helping slow the waves of migrants crossing the southern U.S. border. . .
Federal authorities say that for nearly two decades, Hernández profited from drug trades that brought hundreds of thousands of kilos of cocaine into the U.S., even at times working with the powerful Sinaloa cartel in Mexico.
Trade agreements between the US and Latin America are the second major factor driving poverty and the accompanying violence – and motivating immigrants to risk their lives to cross the border into the US. This aspect is older and has been the subject of some of my past newsletters that address issues around CAFTA, USMCA (replaced NAFTA), and other so-called “free trade” agreements.
As I wrote in my May 22nd, 2023 newsletter:
Why then do we in the US hear little (or nothing) about the root causes of the waves of immigrants we are trying to halt at our borders? Why does Washington continue to implement policies that will never end the problem?
The US’s attempts to slow immigration by stopping people at the border or helping countries police their people and detain them from attempting to cross the border is the equivalent of trying to stem the rising oceans by building sea walls.
The root cause of these problems is the extremely unfair body of laws that govern commerce between the US and countries south of the Rio Grande – policies that support powerful international corporations.
After the collapse of the Soviet Union in 1991, the world’s remaining superpower, the United States, promoted and implemented “free-trade agreements,” such as NAFTA and CAFTA (now USMCA). They are crafted to benefit US corporations and the ruling elites of Latin American countries. For example, they prohibit tariffs imposed by other countries on imports of US agricultural products that compete with local Latin farmers but allow the US to subsidize its agri-businesses. Thus, American corporations can sell US-grown corn, rice, cotton and other products to Central America and Mexico for less than it costs local farmers to grow them. This is the case even though it actually costs the US agri-businesses much more to grow the crops than it costs local farmers (the US taxpayer foots the difference by paying for the subsidies). The devastating fallout for the millions of people who own or work for small businesses in Central America and Mexico that process, transport, market, and consume these goods is huge. The failed economies result in desperation that leads to violence, gangs, drug trafficking, and other conditions that make life unbearable and drive people to attempt the horribly risky trek to the US.
Is a solution possible?
A couple weeks ago I sat down with the former president of Ecuador, Rafael Correa. A charismatic politician who earned a Ph.D. in Economics from the University of Illinois and had brought political stability to his country by being democratically elected as president for ten years – after a string of seven presidents in the previous ten years! He had also fallen prey to the opposition’s charges of corruption and now lives in exile. We met in Mexico City, where he interviewed me on his popular TV show “Conversations with Correa.”
After we discussed the topics raised above, I asked him if he had hope. He frowned. “These are very tough times,” he said. “But of course I have hope. I’m an optimist. We humans have been through many crises, and we’ve always managed to find solutions.”
That pretty succinctly sums up my feelings. I too have hope. And as I sat there with the former president facing a battery of TV cameras, it became clear that a lot of my hope stems from speaking at events and meeting with people in the US, Europe, Latin American, and Asia. I know there is a rising consciousness that the solution has to start with a recognition that we in the US and Europe must take responsibility for the role our demand for drugs, our government policies, and our appetite for inexpensive produce and goods plays in creating the problems that seem to overwhelm most of the world. It’s not just violence, but also global warming, fractured governments, discrimination, intolerance, and the tendency to turn to autocrats who want us to believe that the “other’ is the only problem. As William Ury says in his most recent book, Possible, “Possible does not mean inevitable, or even probable, possible simply means possible. Whether possible becomes a reality depends on us. . .What is made by us can be changed by us.”