The Menendez Plan: Social Development as a Path to Hemispheric Success

In December 2007, COHA Research Associates Laura Starr and Maria Delle Donne published an extensive article on the Mérida Initiative and its implications for the region, titled, “Does the Mérida Initiative Represent a New Direction for U.S.-Mexico Relations…” Please reference that material for an analysis of the initiative as it pertains to the following research effort.

In October 2007, as President Bush enthusiastically introduced the Mérida Initiative, Senator Bob Menendez (D-NJ) proposed an alternative plan for aid to Latin America, the Social Investment and Economic Development for the Americas Act (s2120). Fully aware of the threat that narco-trafficking poses to the security of the Americas, as well as to its hemispheric partners, Menendez believes the answer to such social pathologies should go beyond an increase to a country’s security forces and narco-police. Accordingly, the New Jersey legislator has proposed a plan that will attempt to remedy the deeper social issues that underlie the problem. Menendez has said of his plan, “This initiative aims to make the United States safer, stronger and more prosperous by making our hemisphere more stable and more affluent.”

S2120 will serve the purpose of financing social development in Latin America while simultaneously repairing the fractured U.S.-Latin American relationship that has resulted from an inadequate U.S. foreign policy towards the region. Menendez, among many others, has recognized this need, claiming, “Our challenge in this regard will be to broaden the scope of our federal funds in terms of international diplomacy, development aid, and international assistance. Many Latinos in the United States look at Latin America and see trouble brewing.”

On June 30, 2008, President Bush signed H.R. 2642, the Supplemental Appropriations Act for 2008, which allocates nearly $162 billion to the Iraq and Afghanistan wars. In addition to those funds, this last military spending measure of the Bush presidency includes the funding for the Mérida Initiative. This legislation specifically appropriates $400 million in aid to Mexico and an additional $65 million to Central America (namely Nicaragua, Guatemala, Honduras, El Salvador, Costa Rica, Belize, Panamá, the Dominican Republic and Haiti) to combat drug trafficking. The aid package has most important implications for U.S.-Mexican relations, which have become increasingly strained in recent years due to the unresolved drug trade existing between the two countries.

The approved version of the Mérida Initiative strongly focuses on military aid. The funds will supply Mexico with the means necessary to acquire inspection equipment, helicopters and surveillance aircraft. It will also provide advanced technologies to collect criminal information, technical advice and training to strengthen the criminal justice system, as well as other resources to implement anti-gang measures.

Restraining Drug-Trafficking or Fueling Corruption?
Supporters of the Mérida Initiative applaud the U.S. and Mexican officials who have recognized that the surge in drug-related violence is a transnational problem requiring a multilateral solution. Drug trafficking has been a major point of contention in the region, with each country placing the blame on others according to their respective role in either the demand or supply side of the trade. The Mérida Initiative is meant to represent a joint endeavor aimed at controlling the violence that accounted for 2,700 deaths in 2007 and has claimed over 2,300 lives in Mexico already this year. Mérida signifies the beginning of a more cooperative relationship between the U.S. and Mexico. Senator Chris Dodd (D-CT), chairman of the Senate Foreign Relations Subcommittee on the Western Hemisphere, praised the bill, saying, “The United States and Mexico must continue to work together to tackle our common security challenges and reduce drug trafficking and violence on both sides of our border.”

The Mérida Initiative, however, has met with considerable resistance on both sides of the border. Some find the bill worrisome, as it focuses on bolstering the military and police forces, both of which are notorious in the region for their corruption and violence. Mercedes Murillo, a human rights activist from Sinaloa, told Time magazine, “Do you think there can be justice inside these same armed forces that are carrying out the atrocities?” For this reason, the original version of the Mérida Initiative included a provision to ensure that Mexican military personnel accused of human rights violations would be tried in civilian courts, though current Mexican law mandates they be tried by a military court. While some initially saw this as an infringement on Mexican sovereignty, others hailed the qualification as a step to restrain corruption and violence within the security forces. The U.S Congress subsequently dropped the human rights proviso, a change welcomed by Mexican President Felipe Calderon. Moreover, many see this aid package as a perpetuation of Latin American militarization, which has proven so detrimental to democracy-building and peace throughout the region, particularly in the 1980s when military rule was ubiquitous.

This influx of military aid to Mexico is meant to counteract the worsening violence along its border with the U.S., which is perpetuated by the growing presence of several narco-trafficking gangs. However, the hundreds of millions of dollars invested in military and police hardware is troubling given the already overwhelming number of arms being trafficked illegally across the U.S.–Mexican border. A 2007 report by Strategic Forecasting, Inc. estimated that nearly 90 percent of illegal arms seized in Mexico are manufactured in the U.S. The supplying of both legal and illegal arms to narco-traffickers, corrupt local authorities, and black market vendors leaves many Mexican and United States citizens unsettled.

Military Spending Not Enough
A recent Milenio poll in Mexico found that the majority of Mexican voters polled were less than confident that the government was succeeding in its efforts to curb the country’s recent surge in violence. The poll concluded, “There was also a substantial drop in the percentage of people who thought President Felipe Calderón should carry on with the current policy.” In April 2007, 73% did, but now the figure has now dropped to 55%. There was an almost identical drop in support for the use of the army (75% down to 54%).

Menendez has said, “A strong social and economic backbone is a foundation upon which democracies can prosper—this will enable stable communities and a stable region.” By providing funding for social development programs that target these goals, Washington will hasten Latin America’s progress towards a time when narco-trafficking is less necessary or appealing to a society that is considerably more secure and prosperous than it is today.

Bringing Social Justice to the Region
Menendez’s compelling plan, the Social Investment and Economic Development for the Americas Act of 2007, has six main goals:

[To] improve the quality of life and invest in human capital, specifically by promoting education, improving health and disease prevention, and increasing the access to and quality of housing; (s2120)

According to a 2007 Worldfund study, only 13 percent of Mexican adults receive a high school diploma, compared to 87 percent of adults in the United States. Moreover, approximately 40 million children in Latin America drop out of school each year, with 92 percent beginning primary school but only 32 percent continue on to secondary school.

Social development is the foundation upon which sustainable democracy and economic success lie. Essential to this foundation is education, which has been found to have a positive correlation with both economic and democratic development in a significant number of comparative political studies. Such a connection is not surprising, as any increased level of education typically enables a society to allocate its resources more effectively and efficiently. As education increases, the nation’s populace is able to make better informed and more rational decisions. In addition to increasing the ability to think critically and make rational choices, education also increases the inclination toward democratic values, freedom, and human rights. Thus, a nation that might otherwise follow a corrupt leader blindly becomes educated, leading to the questioning of traditionally-held beliefs and restrictive policies that might otherwise inhibit liberal democracy and lead to the oppression of the general populace.

The results of an effective healthcare system on societal stability and economic success are more subtle but no less significant. Not only do social programs that provide free or inexpensive
healthcare remove a financial burden from the shoulders of the poor, but they also contribute to a more functional society. Obviously, access to healthcare will result in fewer untreated diseases and a healthier population. Those who might otherwise detract from societal resources are now more able to contribute to them, participating in the work force at their full capacity. Likewise, with some of their financial burden eliminated, citizens are less likely to turn to illicit activities in order to support themselves and their families.

The Inter-American Development Bank reported in 2006, “Despite significant progress in some countries [in Latin America and the Caribbean], more than 20 million households are sharing dwellings, and 30 million households live in inadequate homes.” It is difficult for citizens to perform at their fullest capacity without adequate housing, thus draining the nation of an efficient work force. By slashing its vagrancy rate, Latin America could decrease the related tendency toward criminal activities. A better educated, healthier, and adequately housed population could produce a more stable society. A stable economy will encourage foreign investment and create a positive cycle of development. Not only will Latin America feel the benefits of the aforementioned cycle, but the U.S. as well could witness a more positive return on its investment in the form of a more stable, efficient trading partner and a hemispheric ally.

[To] reduce crime, particularly violent crime, including murder, kidnapping, gang violence, and violence against women; (s2120)

A 2007 collaborative study by Soares and Naritomi revealed, “The occurrence of death due to violence is much more common in Latin America than in any other region: it is roughly 200 percent higher than in North America and in the Western Pacific, 450 percent higher than in Western Europe and 30 percent higher than in the former Communist Block.”

At first glance, this goal might be seen as a similarity between the Mérida Initiative and s2120. However, the goal of the latter is much broader in scope. Rather than focusing on criminal activities specifically linked to drug trafficking, s2120 hopes to combat a variety of violent crimes that beleaguer the region. Because violent crime and drug-related crimes are often linked, however, funding for anti-crime programs must address both drug- and non-drug-related crime, making Latin America safer as a whole.

Compared to s2120, the Mérida Initiative addresses the short-term goal of combating the recent spike in violent crime in Mexico and Central America. Menendez’s bill is more farsighted and is not aimed at providing helicopters and weaponry to the region’s armed forces. Rather, under his measures, steps will be taken to strengthen local law enforcement institutions to assuage public insecurity over the long term.

S2120 recognizes the limitations of an aid package that is mainly focused on investments in military resources. As the country with the most dominant military in the world, it is only natural for the United States to see another country’s armed forces as playing an essential part in that nation’s development. A purely militaristic approach, however, will be a self-perpetuating one. The investment that the U.S. makes in the Mexican military today will likely need to be repeated multiple times in the future: narco-trafficking will continue until the fundamental reasons why drugs are being produced and consumed are confronted. However, the bill proposed by Senator Menendez acknowledges the underlying problems that limit Latin America’s full social and economic success, as well as the need for a multifaceted approach to combat the inequality, repression, and economic depression of the region.

[To] Generate rural development and reduce poverty in the agricultural and non-agricultural rural sector; (s2120)

“The rural contribution to development in the region has been hampered by insufficient investment in public services,” said Daniel Lederman, World Bank senior economist for Latin America and the Caribbean. Lederman continued, “The rural communities face the highest poverty rates, lack of access to public services and private markets, and inadequate infrastructure to realize their full potential.” A 2005 World Bank study, concluded, “In countries such as Bolivia, Guatemala, Honduras, Nicaragua, Paraguay and Peru, at least 70 percent of the rural population lives in poverty.” Compounding this problem, researchers found that the actual size of the rural population in the region is close to twice the previously estimated number. Furthermore, the researchers observed that the real problem is the disproportionate benefit that urban areas receive from existing development projects combined with the often patently insufficient amount of rural public spending, compared to the sector’s contribution to overall development.

Development programs would once again make traditional agricultural practices an appealing business. Oftentimes, the reason farmers resort to growing illegal crops is because they can no longer sustain themselves on the earnings resulting from traditional products. Increased local production also has the potential to mitigate the effects of the current food crisis in Latin America if some form of a subsidized crop substitution program is devised by officials. Likewise, the increased agro-technology that rural development funding would bring would allow farmers to produce at a higher rate. This higher rate of production will help Latin American farmers compete with the low-priced U.S.-subsidized crop imports that have had a negative effect on Latin America’s agricultural sectors. Hopefully, a more productive agriculture will encourage regional legislators to reform the procedure by which land titles are issued, promoting competition and addressing the historical problem of severe land ownership concentration in the hands of a few.

[To] Strengthen the rule of law, governance, and democracy through the establishment of independent judiciaries, efficient processes to adjudicate claims, and trusted law enforcement bodies; (s2120)

By strengthening the role of independent judiciaries, s2120 focuses the U.S. aid effort on one of the most profoundly troubling institutional problems facing contemporary Latin America: corruption. According to the 2006 Transparency International Corruption Perception Index, only 5 nations from all of Latin America and the Caribbean scored above a 5, which is the number that distinguishes between countries that do or do not have a “serious” corruption problem. Bureaucracy and elitism have created a system in which money can pardon a perpetrator of even the most heinous crimes or may lead to unwarranted punishment for a crime not committed. By severing the allegiances of judiciary officials to both big business and politicians, s2120 will deliver a damaging blow to the rampant corruption that plagues Latin America. Clearly, a more independent and bona fide legal system will have an incomparable impact on the liberalization and stability of the region. Social programs that enhance the image of “the law” and the trustworthiness and professionalism of the police will encourage the masses to place their confidence in a local legal system, which will abide by rules that are equally and fairly applied to all.

[To] Reduce poverty and eliminate the exclusion of marginalized populations, including indigenous groups, people of African descent, women, rural and urban poor, and people with disabilities; (s2120)

The exclusion of large numbers of Latin Americans from fully participating in civil society is undoubtedly detrimental, not only to the marginalized, but also to society as a whole. Without all of its members functioning as a part of the system, a society can never reach its full potential. The region has a long history of oppressing indigenous peoples, women, and people of African descent. Those coming from such marginalized communities have, in recent years, began to gain prominent public positions. Most notably, Evo Morales was elected Bolivia’s first indigenous president. Unfortunately, many of the dissident voices of Latin America remain unheard and the value of their participation in the government and economy is all but unfelt. Without the input of all sectors of the population, Latin American governments will always face the threat of the disaffected rising up against the status quo and threatening the stability of the region.

In addition to the moral and political implications of a largely marginalized sector of society, there are also economic consequences that require consideration. The informal market – those who work outside the traditional legal and economic systems within a country – includes nearly 40 percent of all labor in Latin America and might be considered the largest of all marginalized groups. The tax revenues that such a large population would otherwise generate are lost, productivity is stifled and workers are not protected by legal or economic institutions. By challenging exclusionary business and social practices, s2120 will improve the social welfare of all Latin Americans while simultaneously invigorating the region’s economy.

[To] Expand the middle class through promoting microenterprise, improving the investment climate, and creating a competitive workforce in Latin America and the Caribbean. (s2120)

A 2008 World Bank publication reported that over 40 percent of Latin American and Caribbean firms reported that a lack of access to finance was a major problem, and over 50 percent reported the cost of finance as similarly problematic. Microenterprise offers new opportunities for the Latin American small business sector to grow and diversify. It was first introduced as a means of providing funds to those disadvantaged groups, such as women and the poor, who are often overlooked or refused credit by traditional lending institutions. Microenterprise also promises to encourage increased involvement in the formal business sector by means of a gradual conversion process. These opportunities are of paramount importance, given the problematic domination of much of the region’s economies by the exhaustible natural resource sector. Moreover, microenterprise possesses huge potential as a social program since it ensures that a significant portion of entrepreneurs will benefit from microfinance startup funds guaranteed by the Menendez legislation. It is a fiscally advantageous policy for all those involved because of the relatively small funds that would be risked to finance such a worthwhile program.

Microenterprise has the potential to foster increased competition in the Latin American economy, benefiting businesspeople and consumers alike. Trading partners, like the U.S., will also benefit from a more stable and functional Latin American economy. As Menendez has stated, “It will help expand markets for U.S. businesses and the goods and services they offer. Promoting the success of Latin America is a strategic investment for the United States, not only because it represents a good-neighbor policy, but also because it is good business.”

S2120: The Logistics
If passed, Menendez’s bill will provide Latin American nations with $2.5 billion over 10 years to fund the aforementioned social and economic development programs. The bill specifies that no more than 7 percent of the total funds may go toward administrative costs, ensuring that the bulk of the funding actually reaches the programs for which it is intended and the Latin Americans who need it most.

Citing the irresponsible dispersal of funds provided by the U.S. government to Pakistan, Menendez concludes, “…It’s unfair to American taxpayers to be so careless with billions of their dollars.” For this reason, Menendez’s social investment bill establishes strict evaluative measures from the conception of a project through its implementation and after its conclusion to ensure that each initiative is reducing poverty and increasing the quality of life of the area’s residents. Each country will have a stake in its own success, as the funds are contingent on the recipient nation matching 10 percent of the U.S. contribution. Menendez assures that the funds allocated by his plan will not be misused, but will enhance hemispheric collaboration. He states, this bill “demonstrates a long-term U.S. commitment to the people of our hemisphere. It will further develop and promote cooperative relationships with friendly countries to ensure we continue economic development and the growth and promotion of democratic institutions.”

In its current form, the bill leaves the specifics of how the funds will be spent intentionally ambiguous. If it is enacted, the United States Agency for International Development and the Inter-American Development Bank will meet to clarify what form the actual spending regimen will take and fine-tune the new legislation’s provisions. This approach will ensure the flexibility of Menendez’s plan, and that adjustments can be made to particular aspects of the policies in order to better harmonize with the development style of each nation.

Engaging Latin America: The Future of s2120
The Social Investment and Economic Development for the Americas Act is currently being deliberated in the Senate, having already passed through the most preliminary phases of the legislative process. Senator Menendez is pleased with the progress that has been made with the drafting of the bill, one which originally stalled when he first put it forth during his years in the House of Representatives. Menendez observed, “We are proud of the broad, bipartisan support we received in the committee and look forward to bringing this bill to the Senate floor.” In order for it to continue its path to success, members of both parties in both houses will need to stand behind it. “We must work in a bipartisan manner to avoid any negative influence of nations that seek to increase false democracies and prop up existing dictatorships… [We] commend members of the committee for approving this bill and urge Senate leadership to bring the bill to the full Senate for consideration.” (Menendez)

The bill proposed by Senator Menendez is but a step towards the creation of a more stable, economically independent Latin America. However, s2120 cannot be considered a solution on its own. The bill must be coupled with reforms in U.S. diplomatic policy toward Latin America and a respect for its autonomy and sovereign institutions. Such reforms must include changes in current trade policies, including an evaluation and reconfiguration of U.S. agricultural subsidies. U.S. foreign policy goals must reflect a genuine respect for Latin American political systems and recognition of Latin America’s self-awareness across all sectors—civil, political, and economic alike. Senator Menendez has identified a pressing need for a transformed U.S.-Latin American relationship and recognized the potential that s2120 has to achieve this goal when he said, “Our lack of engagement in Latin America has created a vacuum that has allowed some to sell an anti-American agenda which simply has no place in the region. This type of commitment to the development of Latin American nations and their institutions helps fill that vacuum and make our nation more secure.”