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Canada & LatAm: Rocks Ahead?

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Canada's relationship with Latin America is under challenge from a probable NAFTA renegotiation and more volatility in Haiti.

BY CARLO DADE

Eleven months since Prime Minister Stephen Harper’s visit to Chile launched Canada’s new foreign policy focus on the Americas, and the government has only now approved a Memorandum to Cabinet, assiduously and arduously prepared by the Department of Foreign Affairs, outlining exactly how this strategy will be realized.

However, as Parliament leaves for summer recess in anticipation of a fall election, two new developments in the region, in addition to the commodities shock and food crisis, will profoundly impact the government’s desire to re-engage in the hemisphere and need to be given some consideration over the break

NAFTA: PREPARE TO RENEGOTIATE

The most serious challenge for Canada may in fact come from the U.S. presidential election. The likely Democratic nominee and favorite to win the election is Barack Obama.

More disturbing to Canada and the region than Obama’s strong support of the 2008 Farm Bill, universally denounced as a setback to the global development agenda, is his apparent conviction to renegotiate the North American Free Trade Agreement (NAFTA). Conventional wisdom among pundits first suggested that Obama’s anti-trade and anti-NAFTA stance was mere election-year posturing. However, Obama has spoken out too strongly and too often about renegotiating for it to be dismissed.

As his position has endured and hardened, it is interesting to now see a second line defence emerge amongst U.S. election analysts that "his room to maneuver will be limited." The emerging evidence, however, doesn’t support this. One can sense a shift among his advisors as they believe they are constructing a new coalition not bound by what is conventional. There are few better or more politically profitable opportunities for Obama to demonstrate this than by promising to renegotiate NAFTA as he positions himself against free-trader and NAFTA supporter John McCain.

Even though NAFTA renegotiation would likely not touch current security and open board arrangements, labour, agriculture and softwood would be fair game. For Canada, other than obvious panic and turmoil, a NAFTA renegotiation could well derail FTA negotiations with Panama, the Dominican Republic, Central America and the Caribbean as personnel and attention at Foreign Affairs would be focused on damming the NAFTA breach. However, if the US position toward FTAs does harden, then a Canadian FTA with Colombia, which should be ratified early this fall, would become an important signal to the region about Canada’s commitment to free trade and significantly enhance Canadian prestige.

HAITI: STRAY BULLETS & MORAL HAZARD

The recent progress in Haiti is being threatened by a resurgence of the dangerous, narrow-minded and petty politics that have proved so damaging to the country and donor engagement in the past. This trend, as with so much in Haiti, has gone largely unnoticed in Canada.

The April 1 shooting on the floor of the Haitian parliament during a debate over members’ alleged gross abuse of tire allowances (one parliamentarian managed to rack up charges for 87 tires in one year – 82 more than the allowance) is not surprising given that, as reported in FOCALPoint two years ago, the type of cars and delegate per diems were among the first matters debated by the then just reconstituted Haitian parliament.

In addition to the tire scandal, it has recently been reported that parliament has a staff of 700, including departments with more senior management than employees. Clearly the massive flows of aid pumped into parliament by foreign donors, including Canada, need more oversight.

More worrisome are attacks against members of the Haitian diaspora who volunteered to serve in the country’s reconstruction. Haiti is so bereft of talent, skills and sources of income that this is truly alarming.

The Haitian diaspora are among the best educated and trained of the population and remit over US$1 billion annually, several times more than all forms of official development assistance. Yet, recently, the vice president of the Senate, Rudolph Boulos, one of the few senators who took a pay cut to serve in the Senate, was literally run out of the country because his colleagues suddenly took issue that he was born in the U.S. and carries an American passport. That he was born of Haitian parents who happened to be in the U.S., that he has spent the vast majority of his life in Haiti, and that he has served ably and admirably, was of no concern.

In the same vein, parliament’s rejection of President Preval’s nomination of Inter-American Development Bank official Ericq Pierre as Prime Minister is equally disturbing. His nomination was greeted with universal acclaim as an individual of undisputed competence, passion and professionalism, who knows the country well and could inspire confidence among donors, Yet, he was rejected by parliament because he could not find his grandmother’s birth certificate in Haiti’s National Archives. Rejecting his candidacy over something so materially insignificant is a sign that parliament’s attention is not on advancing the country’s governance and development agendas.

If the Haitian parliament has so little concern for the country, then it is donors who are once again left to hold the bag. One should not be surprised if some pause to reconsider their engagement. Given the large percentage of the national budget and operating expenses that come from foreign donors, it is important that donors and the government work with seriousness of intent and purpose. This is not a question of sovereignty; it is a question of partnership. Donors are keeping their end of the bargain, parliament is not.

That things overall are not worse is to the credit of donors, such as Canada, the Haitian diaspora and a small cadre of government officials, who have done a remarkable job of keeping the country afloat. Yet, the donor mantra that "Haiti cannot be allowed to fail" appears to have resulted in a moral hazard conundrum

as Haitian parliamentarians and politicians calculate that the cost for their mistakes, inaction, intransigence and misconduct will be borne by donors who repeatedly return to rebuild, so they act accordingly.

Yet, the Haitian political class should be aware that donors for the most part have a limited interest in supporting Haiti. Only the United States is firmly committed to Haiti by geography and hard national interest.

Other donors, Argentina, Brazil, Chile and Canada, are all in Haiti through some combination of contrived interest and idiosyncratic whim. To remain engaged, these donors will need to justify their development spending and that means progress must be made.

This moral hazard issue must be recognized and addressed. One partial solution will be to increase economic growth and job creation. With no other real sources of potential income or advancement in the country, there is incessant pressure to use government for rent seeking and personal gain. This pressure will not disappear overnight, but some real concentrated effort to advance economic growth and job creation could offer some release.

Canada will need to keep its eyes wide open this summer as its biggest trading partner and biggest aid recipient in the hemisphere veer closer to changing course.

Carlo Dade is executive director of Canadian Foundation for the Americas (FOCAL). This column originally appereared in FOCAL's publication FOCALPoint. Republished with permission from FOCAL.

 

 

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