Trump's 'Monroe Doctrine 2.0' completely misreads Latin America

The “Trump Corollary” to the Monroe Doctrine, “a common-sense and potent restoration of American power and priorities, consistent with American security interests,” stating that “the American people—not foreign nations nor globalist institutions—will always control their own destiny in our hemisphere,” is a key component of the National Security Strategy 2025 released last week by the Trump administration.

Putting the Western Hemisphere front and center as a U.S. foreign policy priority marks a significant shift from the “pivot to Asia” launched in President Obama’s first term.

In principle, it is difficult to object to the notion that, as it retreats from an overly ambitious global agenda, the U.S. should reprioritize its foreign policy objectives. Thus, a renewed focus on the Americas seems sensible. It is also quite a change from the first Trump administration, in which the president only set foot in Latin America once for the G20 summit in Buenos Aires in 2018.

There is also no doubt that the region — still trying to recover from the 2020 crisis when it underwent the biggest economic downturn in 120 years (-6.6%) according to the UN’s ECLAC — could greatly benefit from increased trade, investment and financial cooperation from the United States. For too long, the region has underperformed in terms of economic growth. It badly needs the sort of shot in the arm that a serious U.S. policy designed to foster its development could bring about.

As a new book by political scientist Francisco Urdinez, “Economic Displacement: China and the End of US Primacy in Latin America” shows, part of the reason China has made such significant inroads in the Americas is because of U.S. retrenchment, especially in South America. Any attempt to reverse that should be welcome.

That said, the very term “Trump Corollary” to the Monroe Doctrine recalls the “Roosevelt Corollary” coined by President Theodore Roosevelt in the early 20th century to justify what came to be known as U.S. “gunboat diplomacy.” The latter led to the U.S. invasion and occupation of several Central American and Caribbean countries, including Haiti, the Dominican Republic, Cuba and Nicaragua, among others.

As the U.S. deploys its largest aircraft carrier, the USS Gerald Ford, and a significant flotilla of additional war ships off the coast of Venezuela, sinks alleged “drug boats,” kills their crew on unproven allegations of smuggling, and announces it will soon hit targets on Venezuelan land, this association with the Roosevelt Corollary becomes especially vivid.

Much of the attention on the administration’s renewed embrace of the Monroe Doctrine (one that triggers much pushback in the region, for obvious reasons) in the NSS has focused on its military dimension and it calls for “a readjustment of our military presence to address urgent threats in our Hemisphere, especially the missions identified in this strategy.”

Yet the economic dimension should be as much of a concern. It betrays a woefully wrongheaded understanding of the nature of Latin American economies, how they interact with the rest of the world, and what needs to be done to foster the region’s development.

Nothing reflects this better than the very last sentence of the section on the Western Hemisphere, which states “we should make every effort to push out foreign companies that build infrastructure in the region.” Though the document emphasizes how significant a resilient infrastructure is for the U.S. economy, when it comes to Latin America, there is an odd guiding thread pointing in the opposite direction, seemingly determined to stop in its tracks regional infrastructure expansion if a foreign entity is building it.

In the age of a globalized and interdependent world economy, for a region that is far away from the world’s main markets, few things are as significant for its competitiveness as an adequate public infrastructure — that is, its ports, highways, tunnels, bridges and railways. Yet, as it happens, this is also one of the region’s biggest weaknesses.

Decades of underinvestment have led to a current infrastructure deficit that the Economist Intelligence Unit estimates demands an investment of $250 billion a year in 2024-2028 to close the gap. The net result is that logistics and transport costs in Latin America reach as much as between 14 and 18 percent per export unit, in contrast to as low as an 8 percent average among OECD member countries.

This makes Latin American exports, so vital for the region’s economies, less competitive than they otherwise would be, and is one reason for the region’s low growth and relative stagnation.

In this century, and especially since 2010, Chinese construction companies have started to make a dent in this deficit, building ports, highways, railways and subways across the region. Exhibit A in this is the Peruvian port of Chancay, the most modern on South America’s West Coast, built by Chinese company COSCO at $1.3 billion and inaugurated by President Xi in November 2024.

There is little doubt that the reference cited above in the NSS is aimed at excluding Chinese companies from continuing to do so. Moreover, the NSS expands this notion beyond infrastructure by stating, “we will deny non-Hemispheric competitors the ability to position forces or other threatening capabilities, or to own or control strategically vital assets” (my emphasis). This, of course, could mean anything, from dams and power stations to key mineral resources, standing in the way of FDI from anywhere outside the Americas.

There are several problems with this approach. First, it ignores the fact that the fastest growing and most dynamic part of the world today is Asia, and that China is the world’s second largest economy. This means, by definition, that many areas of the world, including Latin America, have seen and will see increased trade and investment flows with it (China is already South America’s number one trading partner). To attempt to stop this is the equivalent of trying to stop the sun from rising.

Second, it ignores the fact that, for decades now, U.S. construction companies have refrained from participating in tendering for bids on Latin American infrastructure projects because they consider them too small, or for other reasons. This is unlikely to change because of U.S. government hectoring. A few years ago, a conservative Colombian government was keen to give the contract for building the Bogota subway project to a U.S. company. It discovered there are no U.S. companies that build subways. In 2019, it adjudicated the bid to a Chinese company instead.

The costs of European construction companies, on the other hand, are generally too high, making them often uncompetitive. Not surprisingly, Chinese companies are doing well, winning bids for many of the badly needed infrastructure projects.

One reason Latin Americans keep migrating to the United States is because of the region’s underdevelopment and the ensuing lack of economic opportunities for its people. The notion that the best way to stop these migration flows is by blocking attempts at lowering the region’s huge infrastructure deficit and thus keeping the region in a perpetual condition of underdevelopment is an unsustainable proposition.

In the new century (as opposed to in 1823, when the Monroe Doctrine was originally proclaimed) Latin American nations have diversified their international links, interact with the world, and benefit from the consequent trade, investment and financial cooperation flows from across the planet — as befits an age of interdependence. To attempt to turn the clock back by blocking investment flows from so-called “extra-Hemispheric powers” is futile. The horse has already left the barn.