The Foreign Service Journal, November 2007

make a dent in both income gaps, and to reduce and regularize the flow of migration to the United States over the long run, the benefits of global- ization must be brought to those who have been excluded and left behind, throughout the region. Focusing only on border security as a way of addressing the migration problem is simply not enough. A Marshall Plan for Latin America Conducting a serious, sustained effort over several years to raise the standard of living in the Western hemisphere could be an extremely high-return investment for the United States, according to Jeffrey Davidow, former U.S. ambassador to Mexico. He and Luis Rubio, a Mexico-U.S. expert, wrote in the September/Octo- ber 2006 issue of Foreign Affairs : “The immigration mess is a direct result of the lack of growth and oppor- tunity in Mexico. As long as Mexico remains poor and the lure of oppor- tunity across the border persists, workers will continue to head north.” Davidow goes so far as to recom- mend the creation of a major fund for infrastructure and other develop- ment goals, “along the lines of what the wealthier northern European nations created for their poorer European Union colleagues.” Senate Majority Leader Harry Reid, D-Nev., has likewise been call- ing for a large increase in aid to Latin America, specifically to promote microcredit lending, small business and entrepreneurial development, small farms and farmers, and a sys- tem of private property ownership in rural communities. Reid argues that “the United States should assist the neighboring country of Mexico ... because the assistance would have a positive impact on the United States by reducing the flow of illegal migrants.” Both Sen. Reid and President Bush have made trips to Latin American countries (Reid to Bolivia, Peru and Ecuador; Bush to Mexico), during which they have called for a redoubling of our attention and efforts to support the expansion of opportunities to the poor in our neighboring countries. Finally, there are calls from Senators Robert Men- endez, D-N.J., John Kerry, D-Mass., and others for a new “Social and Economic Investment Fund for the Americas,” whose purpose would be “to reduce poverty and foster in- creased economic opportunity in the countries of the Western Hemi- sphere.” For the past several decades, U.S. support for economic development in Latin America has been effective in some cases — but not overwhelming and certainly not transformational. Funding levels are extraordinarily low compared to the resources the U.S. invested in Europe following World War II. According to the American Association of Arts and Sciences, U.S. investments in Western Europe after World War II under the Marshall Plan amounted to a total of $13.3 bil- lion over a four-year period — the equivalent of $450 billion if measured in constant 2002 dollars. Compare that to the $40 million to $70 million per year that was provided in aid to Mexico from 2002 to 2006, right on our 2,000-mile-long border — only a small fraction of which goes to eco- nomic development activities. Possibly more relevant to the U.S.- Latin America relationship, however, is the development assistance that poured into southern and Eastern Europe over the past two decades — and its results. For the period from 2000 to 2006, according to a United Nations study, European Union funding for rural development in the south and east amounted to more than $68.4 billion. Today, according to a European Commission report, the income disparity between West- ern Europe and its poorer neighbors to the east and south (which was not nearly as big to begin with as the U.S.-Mexico difference) has been reduced, and employment and real income have increased. In short, all of Europe is benefiting today from a less divided union. Unlike the European plan, the U.S. budget for development in Latin America (including all assistance except counternarcotics support to Colombia and other Andean coun- tries) has always been relatively small — and could now be reduced even further. From 1980 to 1990, accord- ing to “U.S. Overseas Loans and Grants, Obligations and Loan Auth- orizations” (commonly known as “The Greenbook”), total U.S. assis- tance to Latin America averaged about $1.4 billion per year in constant dollars. Between 1990 and 2000, this figure fell to $929 million, and from 2000 to 2005, it was only $671 million — a reduction of more than 50 per- cent in real terms over 20 years. The MillenniumChallenge Account was designed to complement USAID funding in those countries that pass the test of being well governed. (In Latin America, these include Bolivia, Honduras, Nicaragua and El Salva- 52 F O R E I G N S E R V I C E J O U R N A L / N O V E M B E R 2 0 0 7 Most importantly, such a plan would be based on a new urgency, a sense that the gaping disparity between the U.S. and its neighbors is dangerous.