Latin America matters to Australia
18 Dec 2014|
Christ the Redeemer, Brazil.

Underestimating Latin America’s trade opportunities and transnational organised threats may compromise Australia’s economic and security agenda. It’s time for Australian businesses, government and public to take a closer look at this dynamic region.

Latin America has progressed towards better living standards and international relevance. However, progress has been impeded by civil wars, social disparity and international criminal activities. The struggle hasn’t been easy, and it’s far from over.

Still, there’re bright spots that’re drawing attention. A few years ago many called Colombia a failing state; many now see it as a driving economy in the region and an attractive emerging market.).

Having endured an internationalised war on drugs and more than fifty years of conflict and terrorism, according to some world leaders, Colombia is now a role model of resilience for the region (PDF).

Cases like this are more common in Latin America. Peru has dealt with terrorist threats mainly represented by the Shining Path (Sendero Luminoso) and sustained economic growth of around 6.58% during the last nine years.

Chile’s not staying behind either. Starting from close to scratch in 1990, when dictatorship came to end, the country’s turned itself into the most competitive economy in Latin America and the 33rd most competitive in the world.

Resilience, diversified strategic partnerships, and broad and well-managed economies have brought Latin America to this point. So it’s not a coincidence that International Monetary Fund chief, Christine Lagarde, visited the region this month to host an IMF conference and to continue, as Lagarde puts it, ‘unlocking Latin America’s huge potential’.

According to DFAT, Australia exported just $359 million worth of goods to Chile during the last financial year, compared to $1 billion dollars received in imports. Mexico, Peru and Argentina follow the same trend. Surprisingly, Colombia lags all of these with two-way trade being a mere $100 million in 2013. With its moderate trade with the region, Australia either knows something the rest of the world doesn’t or it’s missing an opportunity.

There are some positives: Australia’s become an observer of the Pacific Alliance, an initiative to promote trade, tourism and the movement of capital between Colombia, Chile, Mexico and Peru. Still, the trade balance remains heavily in favour of the Latin Americans.

Blooming markets aren’t the only consideration in this region. Security issues represent another significant subject for Australia. While Latin America has overcome some great historical challenges, terrorism and transnational organised crime remain an continuing concern.

As legal markets and actors embrace change and seek opportunities, criminal and terrorist organisations have transformed their efforts to find revenue and meet their global aspirations. Leading the way are terrorists groups, many of whom are reshaping their organisations.

Fighting for economic and social reforms or political beliefs is history. So too is the economic support of foreign states. Taking their place is a globalised crime corporation approach. That is seen best in the case of FARC (The Revolutionary Armed Forces of Colombia), which began as a rebel peasants group. It now turned into an al-Qaeda ally and is the third richest terrorist group in history,.

According to United Nations Office on Drugs and Crime (UNODC) reports on the globalisation of crime and illicit financial flows (here and here ), drug trafficking unsurprisingly remains the most profitable illegal business. But it’s especially profitable down under: Australians pay US$228,080 for a kilo of cocaine, among the highest price in the world (see also 2014 World Drug Report).

As their portfolios expand and revenues increase, new and more sophisticated forms of money laundering have emerged, making it more difficult for law enforcement institutions to identify, track, investigate and prosecute them. According to the UNODC, an estimated less than 1% of all illicit financial flows are effectively seized or confiscated by authorities. Therefore, it’s no longer only about drugs in Latin America: it’s likely their laundered money has found its way through or in Australia.

The internal restructuring of criminal groups also elevates Australia’s risk level. Traditional hierarchical organised cartel-like structures are being replaced by hybrid, cell-like and interconnected networks. Uneducated and violence-driven drug lords, have been replaced by a new breed of well-spoken, highly-skilled and internationally-operating illegal entrepreneurs.

Similarly, as terrorist and criminal organisations collaborate, terrorist networks emerge as training, weapons, intelligence, support and planning suppliers, perfectly fitting the definition of organised crime. The rise of these movements—generally sympathisers of groups such as FARC—deserve closer attention.

While the US alliance remains the cornerstone of Australia’s approach to the Asia–Pacific, it’s surprising that the Pacific’s eastern rim seems unregarded or underestimated. Careful thinking about how this eastern shore functions as a source of risk and opportunity should be an important policy consideration as Australia’s interests broaden and responsibilities increase.

Cesar Alvarez currently works for the United Nations Office on Drugs and Crime, Bogota. These views are his own. Image courtesy of Flickr user Christian Haugen.