A new world order: How the Biden administration could change relations with Latin America

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Franco Uccelli:

I'd like to welcome everyone to a special edition of El Pulso de America Latina, in which I Franco Uccelli, your host will depart from my traditional weekly macro and markets commentary and welcome a very, very special guest, my esteemed colleague, Senator Mel Martinez for discussion of recent political developments in the U.S. and how our new Biden administration may change, not just the tone, but possibly even the direction of U.S. relations with the rest of the world and in particular, Latin America, of course, as well as the economic outlook for our recurrent world. My distinguished guest Senator Mel Martinez is currently the chairman of the Southeast United States and Latin America for JPMorgan Chase.

After more than a decade of public service, Senator Martinez joined JPMorgan Chase in July, 2010. He was elected to the U.S. Senate in 2004 to represent Florida and served on several committees, including banking, housing, and urban affairs, armed services and foreign affairs, where he actually worked very closely with president-elect Biden. Prior to his time in the Senate, he was the first Cuban American to be a member of a President cabinet in the U.S. where he served as secretary of housing and urban development. Senator Martinez also served as mayor of Orange County, where the city of Orlando is located. And prior to his public service, he practiced law for 25 years. Senator Martinez, it is a true pleasure to have you as a special guest of the El Pulso de America Latina podcast today, welcome Senator.

Mel Martinez:

Thank you for having me.

Franco Uccelli:

So there are a myriad of themes that we can discuss, but perhaps a good way to start a conversation today would be to address some of the reasons violent protests that we saw in Capitol Hill that have shaken up really upset, many people to their core. They have been widely condemned these actions by leaders globally in both the political and business worlds. Given your experience in both of these worlds, particularly your former roles as a Senator and as a member of the cabinet in the U.S. and maybe we can start out by going over some of your thoughts on what really happened during those, uh, times.

Mel Martinez:

Well, there were scenes that, one would never have associated with the United States Capitol building, very, very unfortunate events, really awful, awful moment for our long democracy and the rule of law that we so much cherish in this country. One of the saddest of it is that they're pretty strong evidence that this mob was egged on to some significant degree by our current president. And that's incredibly unfortunate. All of that led to images that to me, frankly, having worked for many years in those halls and having a great reverence for that space, made me really, really sad and made me cringe and maybe worry, honestly, about this moment in our history.

I will have to say that one of the encouraging features of what we saw happen is that order was restored in short order. And that the constitutional process proceeded to conclusion within the next few hours. And president elect Joe Biden was affirmed as the incoming president of the United States after concluding the vote of the Electoral College. In addition to that, I have to say that through this period of time where president Trump has been falsely complaining about a stolen election and with really no evidence to show for it, our court system has shown itself as one of the real strengths of our democracy.

You know, the democracy in the United States and I dare say in other parts of the world where democracy works well, it's really based on having a rule of law or having a strong judiciary. And in our system, a separation of powers that ensures that each of these branches works in unison, one with the other to ensure the execution of our laws and the obedience to our constitution. And so through the last several months after about 60 different court challenges in different States, judges, roundly supported the rule of law. Roundly found no evidence of actual fraud or actual abuse of the electoral process, and even judges who had been appointed to the courts by president Trump during his time in office ruled against him.

And so I think we have to take, little bit of pride in the institutions of democracy, which are really the cornerstone of the democracy and how they operated over the last couple of months, where they have been under unusual stress for our system. And I believe that in the next nine days, we will see a conclusion to president Trump's presidency and on January the 20th at 12 o'clock, we will see a resumption of the constitutional order and a peaceful transfer of power.

Franco Uccelli:

Clearly we have a new administration coming in, will be sworn in, in a matter of hours really, but the country's still divided and the country needs to heal that is very clear. And I guess it will be up to the president to take matters into his own hand, the incoming president. And there are certain things that he can do right away, I suppose, to heal the divisiveness we're seeing in the U.S. Would you care to comment on this?

Mel Martinez:

I think that's one of his most important tasks. You know, I know Joe Biden and I served in the Senate with Joe Biden. In fact, we both served , he was the Chairman at the time of the Senate foreign relations committee, where I served with him, in fact, and that same committee, former president Barack Obama was also a serving Senator at the time. But suffice it to say that I believe president elect Biden as he takes office in just a short time is a- a and look, I speak as a Republican, I have to be clear about this, a more conventional Republican than we've seen in president Trump, but a Republican. But I think president elect Biden a is someone who through long experience and through temperament is particularly suited for the moment in terms of bringing the temperature down and attempting to unite a very divided country.

It's inevitable that some of these passions are going to continue, but I really fervently hope that as he seeks to do the things that he was elected to do and as he seeks to enact an agenda that high upon that agenda will be trying to calm the waters, trying to bring Americans together and trying to restore the faith confidence and dignity to the office of the presidency that is so essential for our system of government. You know, the presidency is one of three co-equal branches, but without a doubt, particularly in the years, uh, since, uh, World War II, uh, the presidency has acquired an incredible amount of power. And we saw both president Obama and again, uh, president Trump use the role of executive orders, uh, very significantly. And in that shape, a lot of the actions of their administration. I have no doubt that president-elect Biden upon taking office will also execute a number of executive orders that will, again, revert back in a different direction.

Only legislative enactments have the permanency of enduring the test of time, but in any event beyond doing those early moves, which I know he'll feel compelled to do in order to keep faith with those who elected him. I also believe he will spend a great deal of his time, his efforts, in, uh, bringing this country together and trying to lower the temperature. He will not be a hundred percent successful in that obviously in political divisions. We know these things usually last a while, and obviously they're always going to be different points of view, but I think Joe Biden is by temperament very well suited to be a senior statesman coming into office now in a way that could restore a level of calm upon our country that I think desperately needed at this moment in history.

Franco Uccelli:

So I'm very happy to hear that is, uh, hope after all. Uh, we do clearly have to restore, uh, political and social stability and order in this country. But here we are in the early days of 2021 and the COVID 19 pandemic is still, uh, raging across the U.S. and really throughout the world. So understanding you were recently vaccinated at a public event in Florida in an effort to encourage more people, particularly Latin Americans to consider getting vaccinated, uh, when they're able to do so. I suppose my question to you is what do you foresee for the U.S. and global economies for the second half of this year? And of course, this is assuming that vaccinations, uh, proceed as planned and that the U.S. economy shows, uh, some robustness, I guess, and that the U.S. generally achieves a level of, uh, herd immunity.

Mel Martinez:

Well, Franco, I think, I'll try to dissect your question, which I think had a couple of multiple branches. So maybe you can come back to me with some follow-ups. I, first of all, wanted to be clear I had the vaccine a week ago, well now almost a week ago. Absolutely no side effects, no problems, a little soreness in the arm. I strongly urge, uh, anyone listening that upon having the ability to get it that you do so at once. Uh, I felt a great sense of relief and peace of mind. I still have a second dose to get in some, I don't know, 20 some days, but I already feel a great sense of peace about having had it. And I certainly can report my wife and I, neither one have had any side effects other than a little soreness in the arm for about 48 hours. So that's really good news.

Look, I think president, uh, Biden is going to come into office with a very, very difficult agenda, a deeply divided country, a certain percentage, although I think after the events of last week, maybe a smaller percentage that was there before not considering him a legitimately elected president. You have a pandemic raging in the country and he made a commitment to vaccinate hundred million Americans in the very, very near future. I think it's a tremendously difficult agenda in addition to that tremendous economic uncertainty. So I believe that the Biden administration will focus in their first 90 days, obviously on COVID, on restoring some unity, on restoring the economy, but from a legislative standpoint, and they now control, president Biden's party, the Democrats will control both houses of the Congress and the presidency.

I will have to point out and I'll probably do this again and again, as we talk today, that the majorities are very, very small. And so that in some regards, that limits how aggressive an agenda they can pursue on a one party basis, they're going to have to be fairly bipartisan on what they try to do on both houses of the Congress where both majorities are rather small. But I believe that one of the top priorities for this administration will be to pass a very robust COVID relief package in the first quarter of the year. That package of benefits will try to kick start strong and robust economic growth. It will also help people out of work, but it will also provide it from endless amount of, uh, of funding for states and local government where their coffers and their treasuries have been diminished greatly by the response to the pandemic.

And so there'll be a lot of federal state interaction in that particular package, but I think overall it'll be a tremendous stimulus to the economy to see a very, very substantial, uh, package of assistance in the first quarter of this presidency. On that note, Franco, I also want to point out that there will be also, I believe early in this administration an effort to pass a substantial infrastructure bill, there is a strong bipartisan consensus, and there has been for some period of time for there to be, you know, a strong bipartisan infrastructure bill that will allow the country to build airports and highways and byways and ports, uh, many things that are needed in our country, but it would also put a lot of people to work and it would be tremendously stimulating from an economic standpoint.

And I think there is and has been even to my days in the Senate and fairly strong consensus of opinion for infrastructure plan, when Vice-president Biden took office, as- as vice-president. I remember having negotiations and conversations with him about doing such a bill. It never materialized, it never came into fruition. I know he still wants to do that. I don't know there are many Republicans and Democrats who would love to join with him in doing that, which I think would be great for our country, but also would have a tremendous stimiulating effect. Now that could not occur in Q1 of this year now. But it may be something that happens in a first year of a presidency,

Franco Uccelli:

So very comforting words, very encouraging words I would say, it seems that, uh, the expectation is that the incoming administration has a clear agenda, as to what needs to be tackled first and tremendous willingness to do the right thing and addressing those issues. But perhaps now we can shift gears a bit and talk more about U.S. foreign relations. Take the conversation to another level if you will. Much has been said about president-elect Biden and his likelihood to take a more multi-lateral approach to U.S. foreign relations than president Trump did. I guess my questions are two-fold. One has to do with whether you think that's actually going to happen, whether we're going to see a much multilateral approach, and really what that would entail after all.

Mel Martinez:

Well, first of all, I think we have to understand a president like Biden. He is someone who served in the Senate, his entire life, really his entire adult life, practically speaking. And all through that time, I think in my mind, because he represented a small state of Delaware, but in any event, he spent his focus and his specialty and in the Senate, you tend to specialize on foreign affairs. So I think maybe only comparable to the first president Bush, but in modern history, there has not been a president coming into office as well-prepared for the office. As president Biden is in terms of foreign affairs. Now, will I agree with everything he does in foreign policy?  I would say probably not. We do come from different ideological perspectives, but the fact is that I think he will be much more aligned with the traditional foreign policy of this country.

So I think you will see restored the importance of multilateral institutions. I think you will see a president who will attempt to work closely with our allies. I think you'll see also president who will be very, very willing to discuss trade agreements on a bilateral basis with the UK. I think, uh, in a post Brexit world that they're very interested in approaching the United States on that basis. And while there's always a reluctance among Democrats to do trade agreements, I think because of that longstanding bilateral relationship with, the United Kingdom, that there will be a possibility of that. I think you will see him very strongly restoring NATO to its usual position. I think that you will see him also work closely with all of our European allies as it relates to Latin America, which I think is obviously the area of greatest interest to all of us.

I think in the issues of crisis obviously revolve around Venezuela. And in Venezuela, we have seen a certain amount of weakness in its ability to unite the opposition [to Maduro]. And so those very own fortunate events give rise to a certain reality in Venezuela where I think, President Biden is still going to have a significant problem to deal with. I think he's also going to have a significant problem dealing with the co-related issue of Cuba. President Trump took a very different approach than Obama on Cuba, I think, Biden while he will go back on certain things in Cuba regarding remittances and perhaps travel.

I do not believe that given the lack of a response from the Cuban government to the openings, that he was a part of during the Obama administration, that there will be a full going back to that, which was put on the table by president Obama. I think the Cubans essentially missed the moment and another moment may occur, but I don't believe it will be immediate. And I think there will have to be a lot of, I don't know, a lot of back-channel movement before that occurs. I think in terms of the broader relationship with a region, I think immigration is always a top of the agenda. And I think when we think about immigration and the very tough approach that the Trump presidency took, I think you will see a much different approach. Although the United States will not ever go back to a country of open borders.

I don't think you will see President Biden tearing down a wall between the United States and Mexico, but I think he will put a strong emphasis on continuing good relations with our immediate neighbors in Canada and Mexico. We have a very strong trade Alliance with them, which I don't believe there'll be any effort to change in any way, shape or form. And I think that in addition to that, you will see, uh, uh, president Biden reach out to other, uh, significant countries in the region, again, to try to establish a diplomatic framework that works more on a regional basis than it would on a single, one-off, based on a personal affinity for an individual.

So I think you will see the relationship with Brazil cool a little under president Bolsonaro. I think you will see, perhaps a close relationship with Columbia and, you know, I know Peru has undergone a lot of upheaval recently, and so, but I think, I think you'll see in Biden someone with a reassuring hand when it comes to pro- foreign policy given to his long years of foreign travel, knowing a lot of foreign leaders and a lot of expertise in that area. He's appointed a seasoned team and his foreign policy team. I've not seen any Latin American appointments as of now. And so that remains to be seen what that will be, but his team is tried and true. They all are people who've been seasoned in the foreign policy establishment of the United States. So I think you'll see a fairly traditional American foreign policy going back to what it has been for the last many years.

Franco Uccelli:

Now, one area where there is particular interest among our Latin American friends is there's increased tensions that we have seen between the U.S. and China, but there's great expectation that those tensions may ease actually under a Biden administration. So if we assume that that's the case, would less contentious relationships between the two global superpowers benefit Latin America. Is that something that we can expect to happen?

Mel Martinez:

No, I don't, I don't believe so. I think that, there's a fairly strong bipartisan consensus on the U.S. China relationship being essentially different going forward. I think we went from a period of strategic cooperation to one of strategic competition, and I don't believe that it's fundamentally going to change. Now, having said that, I think in a Biden administration, you'll see a much more diplomatic approach without a basically fundamental difference in terms of the view of China. I think China is viewed as a competitor and it will be so viewed for the rest of our lifetimes, I believe. And so I think that it will be a, an interesting evolution of that foreign policy, but not a dramatic change. Let me also add that I don't know exactly what will happen on this, but I wonder if there will be a going back to some form of the transpacific partnership.

And I think that's of great importance to the countries in the region that have a Pacific border. So in that regard, I wouldn't be surprised is if as a countermeasure or as a counterweight to a very aggressive China, if there isn't an effort to re-establish that transpacific partnership as a way of re-establishing and reigniting United States influence with our allies in the Pacific realm. And so I, this was not something that's been discussed in the campaign, and it is incredibly controversial to talk about trade agreements, but I do think that there could be a second look at that effort because I think in that walking away from that United States made a strong mistake that I think has only aided China's opening in the region.

So anyhow, something to keep an eye on, but no, I think that there's going to be a difficult China relationship with the U.S. However, I see opportunity in some of that and that I think a lot of manufacturing that is currently in China, there's going to be tremendous pressure for that to move elsewhere. And I think Mexico could be a great beneficiary of that, but I think there's a number of others in the region that could also benefit from an increased focus on manufacturing, closer to home and away from what now has become a strong strategic competitor.

Franco Uccelli:

So we have talked a bit about how the priorities as regards to Latin America may change under a Biden administration. We talked about Mexico, to an extent we talked about, Venezuela, we've talked about Cuba. We've touched upon a number of key credits or key countries in Latin America that are particular interest to our client base in that space. So maybe we can devote a minute or two to just highlight some of the issues that might come to the forefront as regards our relationship between the U.S. and Argentina, Colombia and Chile for good measure.

Mel Martinez:

Three countries of great significance to the United States relationship. Let me begin with maybe the more complicated one which is Argentina. And I think a lot of the problems in Argentina have to do with their own situation internally and the issues of debt that continue to be double the Argentinian economy. I think that the prior administration had a very good partnership and relationship with the prior Argentine administration. I just don't think there has been a strong focus during the Trump presidency on specifics in the region, and you will see some restoration there. I just think in terms of Argentina is going to have to be a bilateral approach. There's going to have to be an awful lot of Argentina outreach in terms of that, because, you know, the world is complicated.

There are many demands and, short of a crisis of some sort, I just think that Argentina needs to be at the table and needs to be knocking at the door. I just mean in terms of engagement. And so I think that would be an important approach for Argentina to take. Chile and Colombia are easier cases in that regard. I think that there has been a very strong relationship over the years, certainly with Colombia and the restoration of the rule of law there was a very significant effort that went on a bipartisan basis through the beginning of the Clinton administration, the Bush administration and culminating with a peace agreements. I realized that there's still a lot of consternation about some of that, but I think the trade relationship with Colombia has become more robust.

And I think it will definitely continue to be that way. I think it can only be enhanced in the months to come as it relates to Chile. I think Chile has also had a very comfortable trade relationship and you can only go forward. I don't see any headwinds in the horizon as it relates to Chile and Colombia. I think in terms of Argentina, as I say, because of the changing tides within Argentina, that there's going to have to be a little more careful handling, and there will be unexpected events to take into consideration. President Bush had a tremendous willingness and desire to have a very robust partnership with Latin America across the board and then 911 happened and that was the end of that conversation.

So events can intervene and I think it's important for regional players to be at the table through their offices in Washington and whatnot. And particularly in the case of Argentina, develop a bilateral agenda. And I think that has to be proactively done by Argentina as opposed to anticipate that the United States is going to be reaching out because that probably, at the present time, is not on the top five agenda items with the region.

Franco Uccelli:

Speaking of regional players, of course, Brazil matters a lot for Latin America. It's the largest economy there, it's a country that really moves the needle. And the Trump administration had a very interesting relationship with Brazil, unlike most other countries in Latin America. Is there some expectation that, that relationship, that bilateral relationship between the U.S. and Brazil may change under a Biden administration? And if so, what are your thoughts on what path that relationship may follow?

Mel Martinez:

I think that relationship had a fundamental basis in the Trump years on a personal relationship between the two leaders. And I think that's never a long prescription for a stable long-term relationship. Having said that, [Brazil] is the largest economy by a lot in the region. It's a country of tremendous influence and importance. And I think that there will be a great effort to look at Argentina and try to find a way to make progress in that bilateral relationship. I don't think there's any question, but that collaboration and cooperation with Argentina is important to any successful Latin American effort in the region. And so I would anticipate that, through the naming of a strong ambassador, there will be efforts to continue to have a strong, robust relationship. But I think it'll have to be on a more conventional and traditional basis than what it has been under the Trump presidency, which as I say, has been really based on personality.

Franco Uccelli:

I can talk to you for hours about all these present issues but, with an eye on the clock, perhaps you can indulge me with your thoughts on one final issue. It's more of a philosophical issue, if you will. A lot of people are saying that what's transpired in the world over the past few years may be putting globalization in peril. In fact, some people may argue that globalization is already dead. Is this something really that we should be concerned about? Do you agree, first of all, with this view that globalization may be dead?

Mel Martinez:

No, I really don't. I think that concepts like globalization evolve over time, but no, I really don't think that the tremendous interaction between countries will stop. I think frankly, the pandemic, if anything, has made us all realize what a global world we all live in. What began as a problem in China, didn't take very long until it became a global problem. So I think that even through this crisis, through this tragic event, I think we begin to see the fact that we are part of an interconnected world. I think that technology continues to go a pace and trade and commerce will continue to go in that direction, travel again. So I think those are forces of globalization that I just don't think are done. Now, is there a little more of a, you know, America-first approach in the United States? I think that's always been a thread in the American character going back to the very beginning of our country.

 And so I don't think there's any question, but that we have to recognize that certainly in the United States, there are the seeds of why should we be doing foreign aid? Why should we be worrying about anybody else, can we just live out alone in our little bubble? But that never has worked in the past. It is not a recipe for peace and tranquility in the world, as we have seen through many historical catastrophes of the past century. And so I think that it is inevitably something that the world has been brought closer together through transportation and technology. And I think the forces of globalization are just not going to disappear, even though they may get challenged from time to time by the shifting winds of politics.

Franco Uccelli:

In other words, globalization is not dead, it is simply evolving, adjusting to constantly changing conditions around the globe.

Mel Martinez:

That's at least the Martinez view of it!

Franco Uccelli:

Senator Martinez, I would like to thank you so very much for your candid and very insightful comments. I'm certain our audience in Latin America will find them quite useful. I enjoyed very much our conversation and look forward to doing it again in the not so distant future.

Mel Martinez:

My pleasure Franco, wonderful to be with you and your audience. Thank you very much.