Western Hemisphere Relations Move From Idealism to Realpolitik

Welcome back to Foreign Policy’s Latin America Brief, and happy holidays.

The highlights this week: We look back at some of the year’s biggest stories, including the Western Hemisphere’s diplomatic wager on Venezuela, progress on tropical forest protection in the Amazon, and successful efforts to shore up democracy in Brazil and Guatemala.

Knitting Back Ties

Latin America’s 2023 is ending on a dramatic note. On Wednesday, the United States conducted a high-profile prisoner swap with Venezuela, exchanging a close business associate of Venezuelan President Nicolás Maduro for 10 Americans who had been detained in the country. Caracas also committed to freeing 20 Venezuelan political prisoners, the White House said, and handed over into U.S. custody the fugitive defense contractor Leonard Glenn Francis, also known as “Fat Leonard,” who has been at the center of a Pentagon bribery scandal.

The deal, which followed talks, is indicative of a broader trend in regional politics. In 2023, Latin American countries led by both left-wing and right-wing presidents restored their ambassadors to Venezuela after a yearslong diplomatic nonrecognition strategy that failed to weaken Maduro’s autocracy. The United States also shifted its Venezuela strategy from diplomatic and economic isolation toward engagement.

The general thaw is related to at least two other major patterns in Western Hemisphere relations. The first is Brazil’s reemergence as a proponent of Latin American regionalism under President Luiz Inácio Lula da Silva. The second is Washington’s recalibration of its long-standing punitive sanctions policy toward Caracas.

Rekindled talks among Venezuela, the United States, and Latin American neighbors have centered on Maduro’s desire for sanctions relief as well as the other nations’ desires for restored economic ties, a competitive 2024 presidential election in Venezuela, and reduced outward migration from the country.

The negotiations follow a failed regime change strategy that reached its zenith in 2019, when governments around the world officially recognized a top opposition figure as the rightful leader of Venezuela and many hoped that Maduro would fall. So-called “maximum pressure” U.S. sanctions that the Trump administration imposed on Venezuela’s oil sector pummeled the country’s economy; some 7 million people have left Venezuela since 2015, but Maduro remained.

Now, interlocutors are trying a different tack. In October, Maduro pledged to work toward holding free presidential elections in 2024. Days later, the United States announced the suspension of some broad sanctions on Venezuela’s oil, gas, and gold sectors. Colombia and Brazil were particularly active in negotiations, pushing Maduro toward his electoral guarantees. Lula has traditionally been friendly with Maduro’s socialist political movement and spoke from a position of camaraderie that a historically more antagonistic Washington could not.

Lula’s diplomacy reflects his commitment to regional engagement since taking office on Jan. 1. (Lula’s predecessor, Jair Bolsonaro, spurned ties with Maduro.)

Many of Lula’s ambitions for regional engagement have so far yielded only modest gains: An early summit among South American nations featured considerable bickering, and a hoped-for trade deal between customs union Mercosur and the European Union did not materialize. But concrete results were visible, too. In addition to securing Maduro’s commitments, at December’s Mercosur summit—chaired by Brazil—four development banks unveiled a $10 billion plan to invest in regional infrastructure.

Washington’s shift from isolation to engagement with Caracas was driven in part by shared regional concerns over migration and sanctions’ toll on civilians. But it had other motivations as well. A chief negotiator for Venezuela’s political opposition said U.S. overtures to the country were also impacted by a desire to rein in Caracas’s drift toward non-Western partners, including Russia and Iran. And sanctioning the country with the world’s largest oil reserves became costly amid concerns about global energy security sparked by Russia’s war in Ukraine.

It’s too early to know whether U.S. and Latin American engagement toward Venezuela will bring all of the hoped-for fruits—particularly free and fair elections next year. As of late Thursday, leading opposition presidential candidate María Corina Machado remained banned from running. A partial U.S. sanctions snapback could be in store.

But some positive results are already visible. There was this week’s prisoner swap. And when Maduro threatened to annex part of neighboring Guyana earlier this month, a dialogue mediated by Brazil and regional bodies walked him back from the brink.

This year might be understood as heralding a shift from idealism to realpolitik in Washington’s engagement with its one of its biggest regional adversaries and in Latin American countries’ relations with their spurned neighbor. In 2023, actors across the Western Hemisphere realized that democratic transformation or regime change in Venezuela was not going to happen via “maximum pressure.”

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More Stories We Followed This Year

Brazilian President Luiz Inácio Lula da Silva, his Minister of Indigenous Peoples Sonia Guajajara (right), and National Indigenous Foundation President Joenia Wapichana (left) pose during the celebration of Amazon Day at the Planalto Palace in Brasilia on Sept. 5.Evaristo Sa/AFP via Getty Images

Forest protection. Global climate negotiations are influential in shaping countries’ emissions trajectories. So, too, are elections. That much was clear in the Brazilian and Colombian portions of the Amazon rainforest in 2023, where levels of deforestation fell sharply following the inaugurations of presidents who had pledged to stem it.

In Brazil, primary forest loss across the Amazon fell 59 percent in 2023, according to watchdog Amazon Conservation. In Colombia, it fell 67 percent. Deforestation is one of the leading sources of carbon emissions in South America, and Amazon forest loss leads to the disruption of regional ecosystems.

This year also saw a first-time diplomatic push by Brazil to encourage rainforest protection in neighboring South American countries via a so-called “Amazon summit.” The event failed to deliver a concrete new target shared by all eight countries in attendance, but it elevated conservation as a regional priority.

There was progress beyond Brazil and Colombia, too. After Bolivia’s rate of primary forest lost jumped by 32 percent in 2022, Amazon Conservation data showed the country’s Amazon deforestation slowed in 2023, according to Reuters. The same report found destruction also fell in Peru.

A view of the city of Monterrey, Mexico, on March 13. Billionaire Elon Musk recently confirmed Tesla’s plans to build a new electric car factory in the city.Julio Cesar Aguilar/AFP via Getty Images

Nearshoring in Mexico. Washington’s efforts to shift supply chains of goods purchased by U.S. consumers away from China to places closer to home bore major dividends for Mexico this year. Companies looking to move their China-based manufacturing elsewhere sought alternative countries with cheap labor and a preexisting industrial base. Mexico’s location and free trade agreement with the United States made it a strong candidate.

This year, Mexico surpassed China as the United States’ number one trade partner. In the first nine months of the year, foreign direct investment in Mexico was 30 percent higher than in the same period in 2022, according to government data. The nearshoring activity has led to the establishment of new factories in the northern industrial hotspot of Monterrey. Mexico is on track for an estimated 3.5 percent GDP growth for this year, one of the highest rates in the region.

Still, many analysts say that Mexico is not doing enough to take advantage of its nearshoring opportunity. President Andrés Manuel López Obrador has made unpredictable regulatory decisions and expanded state control over key areas of the economy, such as energy.

What’s also unclear is how China’s role in Mexico’s nearshoring boom will play out. Many of the firms putting manufacturing facilities in Mexico are still shipping in materials from China, leading some analysts to say that Mexico is becoming a so-called connector nation between the United States and China rather than an independent production hub of its own.

Guatemalan President-elect Bernardo Arévalo arrives at the Palace of Justice in Guatemala City on Dec. 12.Johan Ordonez/AFP via Getty Images

Democracy disrupted—and defended. The status quo changed little this year in the region’s hardened autocracies, including Nicaragua and Cuba. Some democratic countries saw dramatic but constitutional political ruptures, such as Ecuador’s August (and October runoff) snap elections following former President Guillermo Lasso’s dissolution of Congress. Meanwhile, Peruvian lawmakers’ attempts to purge members of the country’s judiciary sounded alarms among watchdogs.

But 2023 also saw two major and apparently successful pushes to shore up democracy. In Brazil, international actors and members of the country’s Supreme Court fought back against efforts by Bolsonaro and his supporters to reject the results of a 2022 presidential election that gave rhetorical fire to the Jan. 8 invasion of the Brazilian capital complex. Less than a year later, election deniers have been tried and sentenced, and Bolsonaro is barred from running for office for eight years for spreading lies about the integrity of the vote.

In Guatemala, when elite-aligned members of the country’s judiciary launched multiple attempts to keep anti-corruption President-elect Bernardo Arévalo from taking office following his August victory, pro-democracy activists staged nationwide protests. Foreign interlocutors—especially the United States—also turned up the diplomatic and financial pressure on those seeking to block Arévalo. He appears poised to be sworn in on Jan. 14, 2024.

As the cases of Brazil, Guatemala, and Venezuela showed this year, transnational pro-democracy activism is alive and well in Latin America. It often doesn’t yield immediate results, but it has proved a powerful force in the region over time.