Has the DNI Come around to Recognizing that Latin America Poses Few Threats to the U.S.?

January 29, 2014

The Office of the U.S. Director of National Intelligence (DNI) released its “Worldwide Threat Assessment of the US Intelligence Community” [PDF] for the Senate Select Committee on Intelligence today. The assessment takes what is probably a much more realistic and beneficial stance (for both the people of the U.S. and of Latin America) on Latin America than previously. In contrast to last year’s assessment, which fretted over perceived political instability in Venezuela, the only South American threat noted this year – and mentioned only in passing – is “cocaine from source countries in South America.” (This is in the context of “[d]omestic criminal gangs and transnational organized crime groups” operating in Central America.)

On Honduras, the assessment states:

Central America’s northern tier countries—El Salvador, Guatemala, and Honduras—will likely struggle to overcome the economic and security problems that plague the region.  All three countries are facing debt crises and falling government revenues because of slow economic growth, widespread tax evasion, and large informal economies.  Entrenched political, economic, and public-sector interests resist reforms.   Domestic criminal gangs and transnational organized crime groups, as well as Central America’s status as a major transit area for cocaine from source countries in South America, are fueling record levels of violence in the region.  Regional governments have worked to improve citizen security but with little-to-moderate success.  

The homicide rate in Honduras remains the highest in the world.  New Honduran President Juan Orlando Hernandez will likely prioritize security policy and seek to build a coalition within the divided legislature to push his economic reform agenda.  However, weak governance, widespread corruption, and debt problems will limit prospects for a turnaround.

In this case the assessment seems to be overstating the extent of Honduras’ “debt crisis.” As we noted ahead of the November elections last year, “the country’s debt burden is still relatively low, with interest payments on the debt totaling less than 1.7 percent, and much of the debt is internal and denominated in domestic currency.” This means that the new government “will have ample room to pursue expansionary fiscal policies, increase employment, and invest in infrastructure, education and development” if it chooses to do so. But economics does not seem to be the DNI’s strong suit. Last year’s assessment described an “increasingly deteriorating business environment and growing macroeconomic imbalances” in Venezuela and warned that “[d]ebt obligations will consume a growing share of Venezuela’s oil revenues, even if oil prices remain high.” But as CEPR Co-Director Mark Weisbrot pointed out in a November column for The Guardian:

Interest payments on the public foreign debt, which is the most important measure of public indebtedness, were just $3.7 billion. This government is not going to run out of dollars. The Bank of America’s analysis of Venezuela last month recognized this, and decided as a result that Venezuelan government bonds were a good buy.

(It’s also notable that this time around the assessment states that the proposed U.S.-E.U. Transatlantic Trade and Investment Partnership (TTIP) “has high potential for generating economic growth for both the United States and Europe.” In fact, projected GDP gains for the U.S. would be on the order of just 0.015 percentage points annually.)

The absence of South America (or Cuba, which received two paragraphs in last year’s assessment) in the threat assessment comes just hours after President Obama’s State of the Union speech in which he too, notably barely mentioned “the Americas,” simply saying “…we’re building new ties of commerce, but we’re also expanding cultural and educational exchanges among young people.” While Obama notably pressed for “Fast Track” trade promotion authority that he needs in order to pass the proposed Trans-Pacific Partnership (TPP), there was no other mention of Latin America. This has provoked the ire of extreme rightwing congressional opponents of Latin America’s left governments, such as Rep. Ileana Ros-Lehtinen (R – FL) who fumed:

“We have important elections coming up throughout Latin America … There are a lot of thugs who call themselves democratically elected but who don’t govern in a democratic way. Past State of the Unions have talked a little bit more about freedom and democracy. I thought that’s what the president would do this year.”

No doubt the threat assessment’s failure to imagine threats in Venezuela and other South American countries will also draw flak from certain quarters.

The threat assessment again covers Haiti – and the U.N. mission there (MINUSTAH), which is new. See our analysis here.

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